Skip to main content

Mutual Fund NFO

Top SIP Funds to Invest in India Online 

Should you Invest in Mutual Fund NFO?

The subscription to any NFO starts with Rs 10 for a unit, which can also be driving motive for an investor to make the investment.

If you are a mutual fund investor, one of the ways to invest is through New Fund Offers or NFOs. When a mutual fund comes up with a new fund or series of a scheme for subscription, it is termed as New Fund Offer or NFO.

Currently, there are 10 New Fund Offers open for subscription. Before The NFOs are catagorised into income scheme, growth scheme and ELSS schemes. You can also take tax benefit by investing in ELSS NFO.

However, should you invest in NFOs when there are a multitude of tried and tested funds on offer? Opinion of experts appears to be divided on this issue.

in 2017 so far there have been 30-odd mainboard IPOs. But one-third of them are trading below issue price. On the other hand, most of the equity NFOs launched are doing well. The reason being the judicious portfolio approach taken by fund managers. NFOs may be a new product with no history, but the experienced fund manager and the time-tested portfolio approach ensure that investors' interests are always protected irrespective of market conditions. "With a single stock or security, such an approach cannot be taken and hence it is fraught with risk of money loss

New fund offers have the potential to gain momentum significantly once they are being traded through a successful campaigning. These NFO's can be open-ended or close-ended that is, under open-ended, you can enter the market and purchase any number of share through mutual fund schemes anytime while under close-ended, the subscription to make an investment is time-bound where the issuance of shares is also limited.

The subscription to any NFO starts with Rs 10, which can also be driving motive for an investor to make the investment and purchase more units. However, you should ideally track all the factors before subscribing to any NFO.

Investors need to exercise caution before committing their money to NFOs. "We fail to find a compelling enough reason for investors to opt for newly launched funds, over funds that have well-established track records of navigating challenging market cycles. Anecdotal evidence tells us that most investors still invest into NFO's for all the wrong reasons – topping the list is the fallacious belief that 'a low NAV is cheap', and it is, therefore, better to invest into an NFO because it has a net asset value of Rs. 10. As the sad plight of most of the NFO's launched shortly before the carnage of 2008 will show, this is far from the truth! Some of these NFO's are still tottering in the red, even a decade later

If an NFO fails to collect enough funds, its marketing and distribution costs would be apportioned over a smaller asset base, leading to a higher expense ratio and compromised returns. This risk is more imminent in the case of NFO's launched by smaller AMC's that do not have the marketing firepower to reach sizeable swathes of the investing community. More equity-oriented NFO's are launched when markets have already gone up significantly, with the intent of cashing in on buoyant retail investor sentiment more than anything else. This may lead to a poor initial investment experience for uninformed first-timers who were unable to resist the allurement of those colourful billboards

The only time an NFOs might be worth considering is if it's one that explores a completely untouched theme that fits in with your investment portfolio. Considering the plethora of funds already available today, the launch of such an NFO remains quite a remote possibility.     


Avoid NFOs If a proven long term product in the same category already Exists           


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

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...

Mutual Fund Review: HDFC Index Sensex Plus

  In terms of size, HDFC Index Sensex Plus may be one of the smallest offerings from the HDFC stable. But that has not dampened its show, which has beaten the Sensex by a mile in overall returns   HDFC Index Sensex Plus is a passively managed diversified equity scheme with Sensex as its benchmark index. The fund also invests a small proportion of its equity portfolio in non-Sensex scrips. The scheme cannot boast of an impressive size and is one of the smallest in the HDFC basket with assets under management (AUM) of less than 60 crore. PERFORMANCE: Being passively managed and portfolio aligned to that of the benchmark, the performance of the index fund is expected to follow that of the benchmark and in this respect, it has not disappointed investors. Since its launch in July 2002, the fund has outperformed Sensex in overall returns by good margins.    While every 1,000 invested in HDFC Index Sensex Plus in July 2002 is worth 6,130 now, a similar amount invested in Sensex then wo...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...
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