Any special benefit in investing in NFO over existing MF scheme?

General
2

There are pros and cons to investing in a NFO. The advantage is that you buy the NAV at par value and can benefit significantly as the fund starts to perform. However the main disadvantage is that one would never know how the fund is likely to perform in the future. In case of an old fund one has the advantage of tracking the historical NAV;s and therefore estimating its risk return chareterstics…but this is not possible at the NFO stage.

Having said that, you can check for few other things while investing in a NFO, such as - who is the fund manager ? how has his historical performance been? does he churn the portfolio frequently? What is the fund size? etc.

3 Likes
3

Could you elaborate your question please?
State examples if possible.

4

NFO menas New Fund Offer i.e. a scheme being launched for the 1st time. Think of it as an IPO of a company.
Existing MF scheme means a scheme which is prevailing from a long time. Think of it as a company that exist in the market like SBIN, Tata Steel, etc.
My question was whether NFO has any benefit over a prevailing scheme, to which Karthik has appropriately replied.

5

That sums it up. Thanks.