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What’s a New Fund Offer (NFO)?

A first-time subscription launched by an asset management company (AMC), New Fund Offer (NFO) allows you to invest in a new scheme launched by the AMC. The main objective for the AMC for launching a new mutual fund offer in the market is for raising capital from the public for buying securities such as shares and government bonds from the market.

 

The ideology behind a New Fund Offer is very similar to that of an Initial Public Offer. Both aim to raise capital. However, one major factor that investors must remember is that AMCs offer new NFO mutual fund schemes only for a stipulated period. Thus, investors can only invest in these new NFO investment schemes at the offer price during the stipulated period. Once the stipulated period elapses, investors can invest in these schemes only at the prevailing NAV at that point in time.

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 NFO mutual fund schemes – open and close-ended schemes

AMCs offer new NFO mutual fund schemes as open-ended and close-ended schemes. Open-ended NFO is a perpetual kind of fund. Thus, once the new mutual fund is launched it continues to exist without an end date. However, closed-ended NFO funds come with a fixed duration such as 3 years, 5 years, and 7 years. Investors can buy open-ended funds anytime.

 

They can invest even after the closure of the new fund offer. However, you can invest in a close-ended fund only during the offer period. Once the offer period elapses, you cannot invest into close-ended funds. Open-ended funds are generally considered more investor friendly as they offer anytime investment and redemption compared with close-ended funds. NFO investment has become a popular option for many investors largely because its Net Asset Value (NAV) is priced at Rs. 10 per unit, compared with other open-ended schemes that have a higher NAV.

 

Disclaimer : *investment in securities market are subject to market risks, read all the related documents carefully before investing

Want to invest in NFO? Please share with us Your contact details & We will shortly get in touch with you.

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Attention Investors

All account holders are requested to please submit a self-attested copy of their Aadhaar card for updating of records.

  • KYC is a one-time exercise while dealing in securities market. Once KYC is done through a SEBI registered intermediary (Broker, DP, Mutual Fund, etc.), you need not undergo the same process again when you approach another intermediary.

  • No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorize your bank to make payment in case of allotment. No worries for refund as the money remains in the investor’s account.

"Prevent unauthorized transactions in your trading and demat account- Update your mobile numbers/email IDs with your Stock Broker and Depository Participant. Receive information of your transactions directly from Exchange on your mobile/email at the end of day. Receive alerts on your Registered Mobile for all debits and other important transactions in your demat account directly from CDSL on the same day’ call us on 02228584545 Email : customerservice@acm.co.in

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