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In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Kotak e-Invest
Features
Ref. No. KLI/22-23/E-BB/492
Curious about getting started with mutual funds right from their launch? New fund offers or NFOs are the first-time subscription opportunities for newly launched mutual fund schemes. They allow you to invest at the ground level, before the fund starts building its portfolio. This blog unpacks how to invest in a new fund offering in a simple, step-by-step manner. You’ll learn how to spot these opportunities early, complete your investment online or offline, and make smart decisions from the very beginning. Whether you're new to mutual funds or looking to expand your portfolio, understanding how to invest in NFO can give you that early mover’s edge.
An NFO (New Fund Offer) marks the launch of a brand-new mutual fund scheme by an Asset Management Company (AMC). It’s essentially the initial offering period where investors can subscribe to the fund before it becomes available for regular purchase in the market. Think of it as getting early access to a fresh investment idea, where you buy units at a fixed Net Asset Value (NAV), usually set at ₹10 per unit.
During this limited window (typically lasting 10 to 15 days), the AMC pools capital from investors to start building its portfolio of securities, which may include equities, debt instruments, or a mix of both. It’s important to note that while most NFOs are priced at ₹10 initially, this may vary for certain categories like liquid funds. An NFO investment offers a ground-floor opportunity, especially for those looking to diversify their portfolio with new strategies or sectors not covered by existing schemes.
Before diving into an NFO, ensure that your KYC (Know Your Customer) formalities are completed. It’s a mandatory step; without KYC compliance, your NFO application might be rejected. Once that’s sorted, you can invest through two main channels:
If you’re wondering, is it good to invest in NFO? For the right investor with clear goals and a bit of risk tolerance, NFOs can offer both diversity and opportunity, especially when timed right and selected with care.
Here are several compelling reasons that highlight its potential advantages:
NFOs offer a clean slate. Since you’re coming in at the very beginning of a mutual fund’s lifecycle, you get to be part of its journey from day one. This appeals to investors who want to explore new ideas or strategies that existing funds may not cover.
One of the standout features of an NFO is its fixed and accessible initial price, typically ₹10 per unit. This makes it easier for investors with limited capital to start investing without needing a large upfront amount.
Some NFOs are launched around unique or emerging investment themes, such as ESG, global markets, or sectoral opportunities. This lets you diversify your portfolio in innovative ways that may not be available in existing schemes.
If the fund is well-managed and aligns with market trends, there’s strong potential for long-term capital appreciation. Being an early investor positions you to benefit from the fund’s future growth trajectory.
NFOs are managed by experienced fund managers who design and execute investment strategies from scratch, based on clear objectives and real-time market insights. This increases the chances of meeting targeted financial outcomes.
Now that you know what an NFO is and how to invest in NFO, it’s time to understand the different types available in the market:
These mutual fund schemes offer the flexibility to invest not only during the initial NFO window but also after the fund is launched. Investors can choose to enter or exit at their discretion, though exit loads may apply for early redemptions.
These funds are ideal for both first-time and seasoned investors, especially those planning to set up a Systematic Investment Plan(SIP) for disciplined and recurring contributions over time.
Unlike open-ended schemes, close-ended NFOs have a fixed maturity period. You can invest only during the NFO window, and premature redemptions are not allowed. However, they are listed on stock exchanges, enabling investors to sell units in the secondary market if a buyer is available.
These are a hybrid of open and close-ended funds. Investments and redemptions are allowed at specific intervals. Say quarterly, semi-annually, or annually, determined by the fund house. They offer a balance of structure and liquidity.
Making informed decisions is key when exploring how to invest in NFO. Here are a few crucial aspects to consider before you commit your capital:
Define your short-term and long-term financial targets. Are you investing for a specific milestone or simply wealth creation? Evaluate your risk tolerance accordingly, especially if you have family obligations or limited disposable income.
Look into the reputation and history of the asset management company launching the NFO. Assess past performances of their schemes, fund manager expertise, and investor reviews to get a sense of reliability and consistency.
Each NFO is designed around a specific theme or strategy, be it sectoral, diversified, or international. Analyze how well this objective aligns with your portfolio strategy.
The offer document includes vital information such as the fund’s asset allocation, expense ratio, lock-in period, and risk factors. A careful review can help you avoid surprises later.
Most NFOs have a minimum entry threshold and clearly defined redemption rules. Ensure these terms match your liquidity needs and financial comfort.
If you’re unsure about evaluating fund objectives or performance potential, consult a qualified financial advisor. They can guide you on how to invest in NFO based on your unique situation, budget, and long-term goals.
Understanding how to invest in NFO empowers you to tap into new mutual fund opportunities at the ground level. By aligning the fund’s objectives with your financial goals and risk appetite, you can make informed decisions and build a strong investment foundation. With the right strategy and awareness, NFOs can be a valuable addition to your long-term portfolio.
1
Yes, many banks offer NFO investment options through their online portals or relationship managers, especially if they are partnered with AMCs.
2
You’ll need a PAN card, valid ID/address proof, and completed KYC documentation to invest in any NFO.
3
No, a demat account is not mandatory. You can invest in NFOs directly through AMCs or mutual fund platforms without one.
4
Evaluate the fund’s objective, asset allocation, risk level, fund manager’s experience, and whether it aligns with your financial goals.
5
Yes, popular mutual fund apps and aggregator platforms allow easy NFO investments with digital KYC and payment options.
6
Most NFOs require a minimum investment of ₹500 to ₹5,000, but it may vary depending on the fund house and scheme type.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Kotak e-Invest
Features
Ref. No. KLI/22-23/E-BB/521
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
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