Skip to main content

Say No to Mutual Fund NFOs

Top SIP Funds Online 


Suddenly, some mutual fund advisors are in love with New Fund Offers or NFOs. A mutual fund house comes up with a New Fund Offer to launch a new scheme. Most mutual fund advisors do not encourage investing in new schemes because they do not have a performance record.


Advisors argue that it is better to invest in a scheme with a consistent performance record in the same category rather than betting on an unknown entity. Advisors make an exception only when an NFO offers something 'unique' that is not available in the market.
  

So, what has changed? Why are some advisors smitten by NFOs these days? Are advisors recommending NFOs because they are offering something 'unique' or they have something that is not available in the market? The answer is no

Some advisors are pushing plain vanilla equity schemes for reasons better known to them. Sometimes, they tell their clients that the scheme would do well because it is from a great mutual fund house. They also recommend some schemes because they are managed by star fund managers. Mostly, they claim (wrongly) that the NFO theme is going to be flavour of the market in the coming days. It really doesn't matter whether the NFO is a largecap offering or a tax savings scheme.
  

My guess is that people are coming with certain theories because the market is at an all-time high, Trendy Investments. Otherwise, there is no reason to recommend new schemes when you already have established schemes available in the same category

There are many financial advisors who frown upon the new-found love for NFOs among their counterparts. They say that some of these advisors were pushing closed-ended NFOs to their clients with the promise of higher returns, whereas the real reason could be extra commissions for them.

How can you push an NFO when there are established players in the same category. We do not recommend IPOs and NFOs

Critics allege that mutual funds are offering extra incentives to their sales force to push their NFOs. However, they are quick to add that they have no proof to back up their claims, except for the fact that NFOs may offer slightly higher commission to distributors. Some others believe that advisors are trying to cash in on the bullish IPO market, where novices throng for listing gains. They say some investors still subscribe to the bogus theory that investing in a scheme
with a Net Asset Value of Rs 10 is better.
  
To sum up, you should avoid NFOs unless they offer something unique. It is always better to invest in a scheme with a proven track record. Sure, the past performance may not be repeated. But the consistent performance of a scheme during different market cycles give you a lot of comfort.   

Here are a few quick pointers that would help you to corner your mutual fund advisors. Whenever your advisor tries to sell you an NFO on the pretext of some new theory, you may try these counterarguments.

Claim: The fund house is great
Counter claim: There are many great fund houses in the market.

Claim: The fund manager is great
Counter claim: There are many great fund managers in the market.

Claim: ELSS scheme is great for tax planning.
Counter claim: I know that, but there are many established ELSSs available in the market.

Claim: Largecap/midcap/smallcap/multicap schemes are going to do well in the coming days.   
Counter claim: Okay, but is it necessary to invest in a new largecap/midcap/smallcap/multicap scheme when there are many established schemes in the respective category available in the market.





SIPs are when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich
For further information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300
OR
You can write to us at
Invest [at] SaveTaxGetRich [dot] Com 

Popular posts from this blog

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...
Read more

Good Loan

Why Is It A Good Loan?: Loans against gold are cheaper and better than personal loans as the former are available at lower interest rates. In contrast, the interest rates on personal loans are not standardised and can vary from bank to bank. Also, a personal loan depends on a host of factors including, the borrower's salary, profession and the purpose for which the loan is being taken.      For instance, the interest rate on a personal loan of 5 lakh falls in a wide range of 15-30%. But loans against gold are available for as low as 11%. Secured borrowing such as a loan against gold, investments or property is cheaper because it is backed by some assets, which command a good value at any point of time. If the borrower defaults on the loan, the banks can liquidate the assets to settle the loan account.    Being a secured loan, the risk of default and credit losses is significantly lower in this loan compared to other forms of loan for personal use. Given the lower risk, gold loa...
Read more

Reliance Health Total

  Reliance Life Insurance has launched Reliance Health Total, a non-linked, non-participating and non-variable health insurance plan . It provides a fixed benefit cover for hospitalisation, critical illnesses and surgeries. The customer can also make a claim for over-the-counter health-related expenses. This is a regular-pay, five-year plan that can be renewed till the age of 99. The plan comes with two options: customers can choose a higher medical reimbursement benefit or a higher sum insured. Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015 1. ICICI Prudential Tax Plan 2. Reliance Tax Saver (ELSS) Fund 3. HDFC TaxSaver 4. DSP BlackRock Tax Saver Fund 5. Religare Tax Plan 6. Franklin India TaxShield 7. Canara Robeco Equity Tax Saver 8. IDFC Tax Advantage (ELSS) Fund 9. Axis Tax Saver Fund 10. BNP Paribas Long Term Equity Fund You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds Invest in Tax Saver Mutual Funds Online - I...
Read more

Right Size your SIPs in terms of tenure and amount

Buy Gold Mutual Funds Invest Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Call 0 94 8300 8300 (India)    Systematic investment plans ( SIPs ) are here to stay. Going by the growing number of SIPs, it does look like investors have taken to them in a big way. Today as much as . 1,000 crore flow into SIPs every month. A SIP, as the name denotes, is a method to invest a fixed amount in a mutual fund at regular intervals --generally monthly or quarterly. It is easy to do and the minimum amount with most mutual funds is a mere . 1,000 per month. You can write post-dated cheques for your investment, or give an auto-debit facility from your bank account. In fact, most investors today prefer setting up an auto debit for their SIPs, since writing cheques is cumbersome. Also, you can choose any tenure that you want for your SIP — six months, one year, five years, 10 years or even opt for a perpetual SIP which will continue forever till you stop it....
Read more

Some tips for individual investors for investment planning

These days, the stock markets are quite volatile in nature with a bearish bias. Rallies do not last long in the markets and peaks of market rallies are reducing. The markets are hitting fresh lows in every fall. Many blue chip stocks are trading 50 percent lower than their high levels. Many stocks are currently trading at their year's low prices or all-time low prices. Many investors have lost their hard-earned money and many others are stuck with stocks that have corrected heavily in the last few weeks. Here are some tips for investors already invested in the stock markets: 1) Hold fundamentally strong options The domestic macroeconomic fundamentals are strong. The GDP growth rate is expected to slow down slightly from the nine percent last year to around 7 - 7.5 percent this year. This is still quite good and encouraging in comparison to other developed countries. The current market crash can be attributed largely to foreign institutional investors' ( FIIs ) outflows but...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now