Should you invest in Mutual Fund NFO- (New Fund Offer)?

🔰 There is a spree of NFO (New Fund offer) being rolled out from MFs. This is after a SEBI mandate that a fund house can only have one fund in a particular category.

📯 Fund houses create a lot of buzz around it to garner as much funds as possible. And with so much marketing, investors get tempted. But is it worth investing in it?

🔰 Where do most of the Funds Invest?

Almost 95% of Mutual Funds (Equity Components) will invest in NSE/BSE Top 500 companies, and these companies are the same as in an existing fund or be it any NFO. The Universe of investments remains the same where every fund manager has to dive in a pick.

🔰 No Track Record: It’s better to invest in an performing existing fund of the same DNA rather than getting tempted by NFOs unless it offers a clear differentiator, Pedigree, or something really novel that doesn’t exist.

🔰 Investors should know how a Fund manager has performed over a period of time by analyzing funds past performance, It’s very important to see how a fund behaves during turbulent times, under challenging conditions, because during hay days everything blossoms.

🔰 IMP: NFO(New MF) are not IPOs (New Stock getting listed) which offers entirely new business metrics.

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