Mutual Funds: In view of the tremendous growth in the stock market, mutual fund companies are rapidly introducing new fund schemes (NFO). Investors are also betting heavily on these new mutual fund schemes. In the months of August and September, investors have got the opportunity to invest in more than 25 NFOs. Experts say that before investing in any new NFO, it is very important to carefully evaluate its strategy, risk and management. Investors should invest only after thorough investigation about it.
How much profit does a low price make
Experts say that investors should be cautious while investing in NFOs. They should not think that investing in low-priced NFOs will give them more profit. Profit depends only on the performance of the scheme. If the new scheme does not perform as expected, then there can be losses in this situation. On the contrary, if investing in a well-performing scheme results in fewer units, it will still give profits to investors.
What are NFOs
New Fund Offer or NFO means new mutual fund schemes introduced in the market. Through this, asset management companies (AMCs) running mutual funds invite investors to invest money in any of their new schemes. NFOs are similar to the initial public offering (IPO) of the stock market, where investors get a unique opportunity to join an investment scheme from the very beginning. Investors can generally buy units of a mutual fund at an offer price of Rs 10 per unit.
Since the past record of new mutual fund schemes is not available, it is difficult to predict its future performance. In such a situation, the investor has to trust the credibility of the company. In this regard, the performance of the company must be checked. If it has given good profits in other schemes, then only invest in its new scheme.