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New Fund Offer
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Okay lets get started.
Almost everyone in capital markets would have heard a term called Initial Public Offer (IPO). Right?
When a company wants to offer shares to the public, they normally do an IPO. This way, the company raises money offering some quantum of shares in exchange.
Similarly, when AMCs wants to bring a new mutual fund scheme, they come up with a New Fund Offer or NFO
Like IPO, AMCs have to file a draft prospectus with SEBI and get the approval before launching a new scheme.
Further, the scheme has to fetch in some minimum amount before it can start operating the system.
Is it good to invest in IPOs?
The Indian Mutual Fund Market already have several thousands of schemes and in most cases, one or the other scheme is already available that addresses a financial need.
Generally, we might not need an NFO, the reasons are mentioned below.
Also, it is always better to invest in a scheme that is already established than going for a new scheme.
An established scheme will have a fund manager who has experience in managing the scheme.
Being an experienced scheme, there will be some corups already in place and new SIP money will keep flowing in.
Established schemes would have lower expenses.
So it is better to look in existing schemes of the AMC than to subscribe for an NFO.
All we have to do is to go though the scheme details, analyze them and then go for the one that suits you.
If you are still interested, check AMFI NFO Page at https://www.amfiindia.com/new-fund-offer
Most schemes are close-ended schemes though.
Should I invest in an NFO because it starts with low NAV
This is a wrong perception.
We need to look at the our investment returns, not scheme NAVs.
If the scheme performs well, say by 20%, it means it will give the same return for your investment, whether you invested in NFO whose NAV is Rs. 10 or in an existing scheme whose NAV is Rs. 100.
Further, in a way, because we do not have existing information about the fund such as who its fund manager is, its current portfolio and other details, it is more riskier to invest in NFO.
How to apply for NFO?
You can apply for NFOs by:
1. Submitting paper NFO application form. The forms can be downloaded from official MF website.
2. Online from the official mutual fund website
3. Online from the registrar website of that scheme (such as MyCAMS)
4. Brokerage and distributor websites (such as ICICI Direct etc.)
How to apply for NFO in MyCAMS
1. Login to MyCAMS
2. Click on NFO Purchase icon on the icons tab. You will be able to see the list of Mutual Funds that are offering NFOs at the moment. For example, at present, in myCAMS, you can see IPO of SBI Mutual Fund. A red circle with 4 would be shown. It means there are 4 NFOs currently available that we can invest from myCAMS. Click on the box that shows the name of the fund house.
3. List of schemes will be displayed. Min. amount - Rupee 5000.00 means, to apply for the NFO, you need to invest Rs. 5000. Click of the Buy Now link below the scheme name for which you wish to invest.
4. If you already have a folio for that mutual fund (for example SBI MF in this case), you will be allowed to select the folio number under which you wish to make the NFO purchase. If you do not have any prior folio, you will be generated a folio number.
5. You will be asked about the investment details (such as Amount, Payment Type and Bank Name) and then taken to the payment gateway to complete the purchase.
BNP paribas balanced fund nfo sip possible or not?
I did not understand your question properly.
Is it possible to start SIP in a scheme which is in NFO?
Sure yes. You can give a SIP Form along with the common application form.
Is it a good scheme to invest in?
I am not sure.. And I generally avoid new schemes too. There are several reasons for this such as low AUM, lack of historical information about the fund manager and the scheme in general etc.
Further, BNP Paribas is a small fund house as well.
- Dated: March 20, 2017
- Introduction to Mutual Funds
- Mutual Fund Units
- Net Asset Value or NAV
- Know Your Customer / KYC
- Expense Ratio
- Systematic Investment Plan and Compounding effect
- Systematic Transfer Plan (STP)
- Systematic Withdrawal Plan (SWP)
- SIP vs Lumpsum Investments
- Open-ended, Close-ended and Interval schemes
- DIRECT plan vs REGULAR plan
- GROWTH option vs DIVIDEND option
- Starting a SIP in MyCAMS
- Stopping a SIP in MyCAMS