When a mutual fund company launches a new mutual fund investment scheme it is called NFO or New Fund Offerings. Like IPO, NFO is the maiden offer made by an Asset Management Company on a subscription basis. In this article, we have listed the new NFO mutual funds that will open for subscription in February 2023.
What is NFO?
An NFO occurs when an asset management company announces a new scheme to raise funds to buy securities. However, unlike IPOs, NFOs are marketed less aggressively, targeting a specific group of investors. As a result, upcoming NFOs in mutual funds often go unnoticed.
The money gathered by launching an NFO is used to buy several investment securities. It is important to understand that NFOs are offered for a limited period, called the offer period. Investors buy major units in the new mutual fund during this period.
Companies can issue new fund offers for new schemes or add new securities to existing schemes.
Types of NFOs
Mutual funds are primarily two kinds- open-end and close-ends.
Open-ended funds: A new fund open-ended mutual fund announces buying new shares on a specific date. For open-ended mutual funds, the units can be bought during a new fund offering or after. Usually, for open-ended funds, the number of units is not restricted, and investors can buy or sell them through brokerage firms.
Mutual fund companies release daily reports on the Net Asset Value of an open-ended fund.
Close-ended funds: As the name suggests, the number of units available in a closed-end mutual fund is restricted. The fund closes for new investors after the NFO period gets over. Investors can buy the units of close-ended NFO mutual funds from the brokerage on the launch date.
Upcoming NFOs in February 2023
The names of the NFO mutual funds in February 2023 are given below.
|Fund’s Name||ISIN Number||Offer Close|
|Kotak Banking & Financial Services Fund (G)||INF174KA1MA7||February 20, 2023|
|Mirae Asset Flexi Cap Fund (G)||INF769K01JG8||February 17, 2023|
|Axis Business Cycle Fund (G)||INF846K019N8||February 16, 2023|
|PGIM India CRISIL IBX Gilt Index Apr 2028 Fund (G)||INF663L01X54||February 16, 2023|
|DSP NIFTY SDL Plus G Sec Sep 2027 50:50 index Fund||INF740KA1SE1||February 15, 2023|
|Nippon India NIFTY SDL Plus G Sec June 2029 Mat 70:30 Idx Fd Rg Growth||INF204KC1AF3||February 14, 2023|
|IDFC Crisil IBX Gilt April 2032 Index Fund Regular Growth||INF194KB1FI9||February 14, 2023|
|Kotak NIFTY SDL July 2033 Index Fund (G)||INF174KA1MG4||February 13, 2023|
|Aditya Birla Sun Life CRISIL IBX SDL June 2032 Index Fund (G)||INF209KB12S4||February 13, 2023|
|ITI Flexi Cap Fund (G)||INF00XX01CL3||February 10, 2023|
|Edelweiss CRISIL IBX 50:50 Gilt Plus SDL Short Duration Index Fund (G)||INF754K01RG3||February 10, 2023|
|UTI Nifty SDL Plus AAA PSU Bond Apr 2026 75:25 Index Fund (G)||INF789F1AXK8||February 08, 2023|
Advantages and disadvantages of investing in NFOs
Investing in a new NFO mutual fund is an exciting way to diversify your portfolio, but there are a few concerns you should know.
Opportunity to explore a new fund: You get a chance to invest in a new scheme, meeting the specific needs of an investor group.
No large flows: Investors can invest in closed-ended funds through new fund offerings. It allows fund managers to select a good amount of securities according the theme of the fund and track performance.
Flexibility: NFO mutual funds offer flexibility to fund managers to select securities in the market. Fund managers have the freedom to choose stocks according to the objective of the fund.
Lock-in: Since NFO funds come with minimum lock-in. It gives freedom to fund managers to utilize the period to generate returns and bar investors from withdrawing funds during market ups and downs.
No track records: There is no historical data to compare the performance of the fund before investing. Investors in NFO mutual funds have to rely on the prospectus published by the AMC before investing.
High expense: An NFO may cost higher than an old fund. It is because a large sum is spent on marketing and paying commissions to intermediaries.
No additional benefit: There is no additional benefit to investing in a new fund offer like an IPO.
You can invest in the NFO mutual funds in February 2023 from the list above. However, we recommend you to read the prospectus and terms and conditions before investing. Explore more investing options across various asset categories with Angel One if you want to diversify your portfolio.