What is NFO in Mutual Fund?

NFO, or New Fund Offer, is the initial offer period during which a mutual fund company launches a new scheme to the public. During this period, investors can subscribe to the units of the mutual fund at an offer price, typically set at Rs. 10 per unit in India.

Key points about NFOs include:

1. Purpose: NFOs are launched to raise funds for investing in various securities, according to the objectives of the new scheme.

2. Time-Limited: The subscription period for an NFO is generally limited, ranging from a few days to a few weeks.

3. Investment Strategy: NFOs can be equity, debt, hybrid, or thematic funds, each with different investment strategies and objectives.

4. Pricing: Unlike existing mutual fund schemes, which are bought at their current Net Asset Value (NAV), units in an NFO are purchased at a fixed price, typically Rs. 10 in India.

5. Potential Benefits: Investors might find opportunities for potential gains if the fund performs well after the launch. However, as with any investment, there are risks involved.

6. Regulatory Approval: NFOs require approval from the Securities and Exchange Board of India (SEBI) before they can be offered to the public.