In the dynamic world of finance, new investment opportunities continually arise, captivating investors with the allure of growth and returns. One avenue that has gained considerable popularity in recent times is New Fund Offers (NFOs). NFOs provide investors with a unique chance to participate in fresh and thrilling investment ventures right from their inception. Let us review ongoing NFOs.
These offerings bring a sense of exclusivity and the potential for early advantages. Whether you’re an experienced investor aiming to diversify your portfolio or a newcomer eager to explore the realm of investments, understanding the intricacies of NFOs is essential.
Join me as I embark on an exploration of the captivating universe of current NFOs, uncovering their significance, benefits, and key factors to consider that can aid you in making well-informed investment choices.
A common mistake made by many investors is hastily jumping into New Fund Offers (NFOs) with the misconception that they can acquire more units at lower costs. Unfortunately, this belief has led to numerous investors experiencing unnecessary losses in the long term.
What is NFO in Mutual Funds
You would generally be aware of investing lumpsum in mutual fund or starting SIP (Systematic Investment Plan). In this case fund is already invested and there are existing investors. But every mutual fund scheme starts with raising fund for the first time. This is called New Fund Offer or (NFO). When a Mutual Fund AMC say like HDFC Mutual Fund feels that there is some theme which could be profitable for investors, it will seek approval from SEBI to launch a new mutual fund scheme. Post all formalities and approvals, it will seek investors to invest in new scheme for the first time. This is also called as NFO. Generally NAV of each unit will be default Ten rupees.
Investors often mix up NFO and IPO. They might seem similar, but they’re actually quite different. In an IPO, shares are sold at a certain price, like 225 or 300 rupees. When the stock starts trading, its price might go up or down based on market feelings. This could lead to some profit when shares are first listed. However, with an NFO, it’s not like that. It’s just a way to gather money to start the investment plan. So, the price always starts at the same NAV (usually ten rupees) as offered. That means there’s no chance of making a profit when the mutual fund starts after the NFO. So, there’s no need to get too excited about NFOs. You can invest in the same fund a week or two later.
Generally, mutual fund distributors get higher commissions during NFOs compared to when the fund becomes regular.
Current NFO List
Current NFO Offers that are open for subscription are mentioned below.
- Kotak Nifty AAA Bond Jun 2025 HTM Index Fund
Let’s do a short review.
NFO / Fund Name: Kotak Nifty AAA Bond Jun 2025 HTM Index Fund Review
NFO Open Date: 15 March 2024
NFO closure Date: 26 March 2024
Category: Other Scheme – Index Funds
Benchmark: Nifty AAA Bond Jun 2025 HTM Index
Expected Returns : Return of the Index is around 7.85%. If you invest in direct plan, then considering provision for fees etc, one can expect returns between 7.25% to 7.5%.
Please read my review of app to invest in direct plan and save on comission.
My short Review
The investment objective of the scheme is to generate returns that are commensurate (before fees and expenses) with the performance of Nifty AAA Bond Jun 2025 HTM Index. This index seeks to track the performance of AAA rated bond issued by Public Sector Undertakings (PSUs), Housing Finance Companies (HFCs), Non-Banking Financial Companies (NBFCs) and Banks maturing near target date of the index, subject to tracking errors.
However, there can be no assurance that the investment objective of the Scheme. Looking at issuers of bonds in which fund will invest, give confidence though.
- 1 HDFC BANK LIMITED
- 2 LIC HOUSING FINANCE LIMITED
- 3 ICICI HOME FINANCE COMPANY LIMITED
- 4 HDB FINANCIAL SERVICES LIMITED
- 5 MAHINDRA AND MAHINDRA FINANCIAL SERVICES LIMITED
- 6 BAJAJ FINANCE LIMITED
- 7 KOTAK MAHINDRA PRIME LIMITED
- 8 SMFG INDIA CREDIT COMPANY LIMITED
- 9 TATA CAPITAL LIMITED
- 10 L AND T FINANCE HOLDINGS LIMITED
- 11 NIIF INFRASTRUCTURE FINANCE LIMITED
- 12 POWER FINANCE CORPORATION LIMITED
- 13 NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
- 14 REC LIMITED
- 15 SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA
- 16 POWER GRID CORPORATION OF INDIA LIMITED
- 17 INDIAN OIL CORPORATION LIMITED
- 18 EXPORT-IMPORT BANK OF INDIA
- 19 HOUSING AND URBAN DEVELOPMENT CORPORATION LIMITED
- 20NATIONAL HOUSING BANK
- 21 INDIAN RAILWAY FINANCE CORPORATION LIMITED
- 22 HINDUSTAN PETROLEUM CORPORATION LIMITED
- 23 NHPC LIMITED
My Take:
If one is looking for alternative to Bank or Corporate Fixed Deposit but do not want to take high risk, then investing in this fund could be an option. Though returns in any mutual fund are not guaranteed, credit rating and reputation of issuers gives confidence. Also being an index fund, we are not dependent on fund manager calls as fund will follow index methodology.
Scheme Information Document:
Click here for Scheme Information Document or SID.
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