We don't approve of investing in NFOs because we believe that it makes more sense to invest in funds with a proven history
19-Oct-2015 •Research Desk
I want to know about the advantages of investing in a new fund offer (NFO). If there are no advantages, why do fund houses advertise NFOs?
We typically don't approve of investing in NFOs. We believe it is better to invest in funds with a proven history. The only exception is when someone comes up with a unique offering that doesn't exist in the market. Needless to say, such offerings are not very common.
Fund houses come up with NFOs and advertise them for two reasons. One, they want to complete their portfolio of offerings. Two, they want to ride on a prevailing theme to attract more investors into the fold and amass more assets under management. However, these are not valid reasons for your to opt for an NFO. Always go for a scheme with a proven long-term performance record.