Should You Be Investing In Mutual Funds Via NFOs?

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Mutual funds have become the all time favorites' of all from investors beginning their investment journey to nearly everyone. More so, since the demonetisation happened, other than many other a lot of domestic money saw its inflow into the mutual funds. There are various ways to invest in the mutual fund and if the fund is a new fund or some new scheme series that has opened for the first time for public subscription it is termed as NFO or new fund offer.

 Should You Be Investing In Mutual Funds Via NFOs?

Recently, the Bharat 22 ETF NFO made history with overwhelming response from all investor categories. Infact the subscription amount was enhanced to accommodate the huge oversubscription for the issue.

But how good is subscribing for the mutual fund in the NFO and what benefit it offers?

As is the case with the latest Bharat 22 ETF NFO , a discount offering if subscription is made during the NFO is quiet appealing.

All the more, subscription to the Mutual fund in a NFO is available for as low as Rs. 10 per unit. Though, to splurge your money only due to low NAV should definitely not be the only criteria of your investment.

With multitude of scrips and a well chosen investment plan by the fund manager, investor is likely to gain in the long run. Though, the positive returns are not certain in each of the case.

A cautious approach should be taken while choosing the NFO route for investing in mutual funds as any less collection during the fund offer period would mean lower returns for you due to higher expense ratio.

Experts suggest to buy into the NFO of a mutual fund that is new in respect of the theme that it aims to cover such as the Bharat 22 ETF NFO that tracks the underlying 22 companies from the public sector and seeks their divestment.

Goodreturns.in

Story first published: Tuesday, November 28, 2017, 9:56 [IST]
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