How are SIPs and NFOs different?

What is the difference between an NFO and SIP? Should I invest in an NFO?
- Venkatesh

It isn't a matter of difference, as they aren't comparable. NFO stands for a new fund offer. In an NFO, a new fund is launched and offered to the public. It is only a statement about what the fund is planning to do and therefore, it has no history. That is all about an NFO.

On the other hand, an SIP refers to a way of investing. You can do an SIP in any fund. If the NFO is an open-ended fund, you can even do an SIP in an NFO. However, to answer your question about investing in an NFO, the answer is mostly no. This is because when it comes to investing, you should invest in something that has a history and credentials, which a new fund doesn't have.

This article was originally published on April 17, 2019.