Hi friends, and welcome to this podcast by Angel One!
NFOs bring a lot of excitement to investors, kyunki popular opinion yeh hai ki inse saste mein stock market aur mutual fund mein investment karne ka opportunity mil jata hai. Kind of like when a cool new person joins the office. I will explain the reference, don’t worry!
An NFO, meaning a new fund offering, happens at the launch of a mutual fund on the stock market. Offer price fix kiya jata hai for a fixed period - investors can buy units at the fixed offer price only during the offer period. Offer period conclude hone ke baad the price of the units begins to fluctuate on a daily basis in tandem with the stock market.
New colleague ko first week mein befriend karna zyaada asaan hai as compared to befriending them after they have settled into a group of friends hai nah? They will be cooperative workwise, corridor mein hi hello toh bol denge, lekin the potential of becoming a friend might be less as compared to when they are new and a little lost. Of course, whether the new colleague is worth befriending or not is another story - yeh baad mein address karenge.
Issi tarah ka logic NFO excitement ka vajah hai.
Log NFO mein invest karte hai because it is possible that they are getting the mutual fund units at a lower price than they will in the future. NFO mein invest karne ka dusra reason ho sakta hai unreasonably high market situation. Iss situation mein entry price kaafi unchi hoti hai. Investors might want to invest but might not want to risk entering the market at a very high price, fearing a price correction in the future. In such a case, an NFO with a fixed, usually low, offer price, seems like an appealing option to many investors.
Chaliye dekhte hai upcoming NFOs in 2021, for the month of April at the time of writing this podcast. NFO ka information fairly near to the date release kiya jata hai, toh watch this space for updates once again next month. For now let’s look at NFOs of mutual funds happening in April 2021.
ICICI Prudential, Aditya Birla, SBI and Nippon India recently closed some of their NFOs wherein the offer price was Rs 10 and the minimum subscription amount was 1000 units; however here are some other NFOs that are currently still open. Let’s dive in to the key details
Option 1 hai Mirae Asset NYSE FANG +ETF FoF Direct Growth with opening date 19 April and closing date 3 May
Option 2 hai Aditya Birla Sun Life Multi Cap Fund Direct Growth jiska opening date tha 19 April aur yeh 3 May tak jari rahegi
Option 3 hai ITI Short Duration Fund Direct Growth with same opening aur closing dates as Option 1 and 2
Option 4 hai Quant Quantamental Fund jo 13 April pe khul gaya tha aur actually 19 April tak jari tha lekin abhi the closing date has been extended to 27 April.
IPOs ke jaise NFOs mein invest karna kaafi risky hai kyunki past record dekhne ka koi possibility nahi hai. This is because there is no track record, being a new fund. Of course, you could judge the potential by the reputation of the fund house, but it is still a fairly heavy risk
Agar aap apna investment journey shuru kar rahe ho toh why not try safer alternatives like low risk mutual funds. Aap SIP choose kar ke apna risk bhi thoda kam kar sakte ho as compared to investing in a lump sum.
Podcast ke start mein we were talking about how people buy NFOs because they seem more accessible in the same way that a new colleague might be more accessible when they are still new and lost. Lekin kya yeh colleague se dosti karna worth hai? Thoda time uska behaviour observe karna behtar rahega, right? In the same way, one might want to first observe the performance of a fund before investing in it; or in other words, wait till the fund has done some time in the market.
Ek aur baat. NFO mein, jab fund market mein nikal jaata hai, uska value aapke offer price se kam hoga. For example, agar aap Rs 10 mein khareed loge, toh marketing costs aur management cost aur whatever admin vagera costs deduct hone ke baad NAV value publish kiya jayega and it will be 9-point-something, not 10. In other words, you’re starting with negative returns and you need to wait to even reach the amount you put down. Kya aapko yeh risk lena hai? It is highly possible ki maturity hone tak, the NAV value of your units will increase dramatically. Lekin hamesha aware rehna chahiye.
Agar aap apna mutual fund investment journey shuru karna chahte ho, ya stock market mein invest karna try karna chahte ho, why not do it with Angel One? Mobile app free hai. You can also listen to more such honest and helpful podcasts, not to mention watch our informative videos. Check out our youtube channel, or visit www.angelone.in to learn more! Milte hain next podcast par. Until then, goodbye from angel broking, and happy investing!