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Saturday, 16 July 2016

New Fund Offer (NFOs)- Current and upcoming offers

NFOs is a mutual fund, and they offered when a new mutual fund launched and offered to the public before it appears up to a daily transaction. For understanding better NFO’s can compare with IOP’s (Initial Public Offering) as in the case of shares trading, Traders buy the stock before it lists.

NFO’s actively managed funds, i.e., where the fund manager applies his/her strategy for the market to beat the market.

1.When a Mutual Fund scheme first available for the investment it is called an NFO.
2.Investors have opportunities to buy fund Unit at Face Value during NFO.

NFO Calendar - Upcoming offers: -

NFO issued in the month of July 2016. Invest in NFO and avail the opportunities.

S No.
Fund Name
Time Frame
HDFC FMP 1161D July 2016 (1)
19/7/16 - 26/7/16
4/7/16 - 18/7/16
Kotak FMP Series 196
14/7/16 - 18/7/16
ICICI Pru. FMP- Series 79 - 1113 Days Plan G
14/7/16 - 19/7/16
Reliance Dual Advantage FTF - IX Plan E
18/7/16 - 31/7/16
UTI Dual Advantage FTF - Series III – III
13/7/16 - 27/7/16
SBI Dual Advantage Fund - Series XVI
1/7/16 - 15/7/16

What is Open-ended fund ended fund?

1.No fixed maturity
2.Entry or exit permitted at any time, even after the NFO
3.Ongoing entry and exit imply that Unit Capital changes

What is Close-ended Fund ended fund?

1.Fixed maturity
2.Investors can buy units from the fund only during NFO
3.Once NFO is closed, scheme gets listed to allow transactions through the stock exchange
4.Listing is compulsory

Important points for New Fund Offer: -

1. Units are offered to investors for the first time through an NFO.

2. Three important dates are: -

A. NFO Open date – date from which investors can invest in the NFO from which investors can invest in the NFO.

B. NFO Close date – Date to which investors can invest in the NFO which investors can invest in the NFO.

C. Scheme Re-Opening date – applicable only to open-ended funds; date from which investors can offer their units for re-purchase to the scheme or buy new units; sale and repurchase prices are announced from Re-Opening date.

3. Other than ELSS, NFOs can remain open for a maximum of 15 days.

4. Allotment of units or refund of money should be done within five business days of closure of NFO.

5. Open-ended schemes have to re-open for sale/repurchase
within five business/working days of the allotment.

Allocation of Units: -

1. During NFO-
 No. of units = Invested Amount / Rs. Invested Amount / Rs. 10

2. Ongoing Sales-
 No. of units = Invested Amount / NAV (No Entry Load)

Advantages of NFOs

i. Brings us new offerings that are not currently available in the market.

ii. A close-ended fund where the investor can’t redeem the amount whenever he wants instead, he needs to keep that amount for the period of time as per NFO declaration.

Disadvantages of NFOs

i. NFO’s are new offerings so difficult to analyze the future of the fund.

ii. Market charges and Initial expenses are more in NFO.

iii. Less of diversification as mostly NFO’s are sector specific

For any query, comment us below.

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1 comment:

  1. Thank you it is really helpful. I want to know about closed ended fund and there return?


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