Request a Call Back
Investors who are looking for new investment opportunities to participate in can consider investing in the New Fund Offering (NFO) by a mutual fund house. Through this scheme, asset management companies offer a specific time during which investors can invest in this scheme at a set price. In this article, we will cover what is NFO in mutual fund and how you can invest in it.
During the first subscription period, known as the New Fund Offering (NFO), investors can buy units of the new scheme at a base price. In most cases, an NFO mutual fund is priced at INR 10 per unit, which makes it beneficial for early investors. The purpose of NFO by an asset management company is to offer a value-for-money proposition especially for long-term investors.
Here is a quick rundown of how NFO operates:
The mutual fund scheme changes to an open-ended mutual fund once the NFO subscription period has ended. The units are now purchased and sold at the current Net Asset Value (NAV) rather than the original fixed price.
SEBI mandates that funds should be fully invested within 30 business days of unit allotment, AMC can seek extensions for investment. However, if investment is incomplete after 60 business days the AMC has to give investors the option to exit without charging any penalty fee.
A NFO mutual fund is offered in different categories to investors based on how and when they are allowed to enter and exit the scheme. Here are the three main types of NFOs in mutual funds:
After the subscription window, an open-ended NFO is transferred to a fund that allows investors to buy or sell units at any time based on the prevailing NAV. There is no limit to the number of units that can be issued, offering liquidity and flexibility to investors.
A close-ended NFO only accepts investments during the initial subscription window. After this period, no new investments are allowed, the units of this scheme are locked in until the scheme matures. While investors cannot directly redeem during the lock-in period, they can sell their units to other investors on the stock exchange.
The characteristics of both open-ended and closed-ended mutual funds are combined in an interval NFO. Investors can purchase or redeem units only during specific transaction windows defined by the AMC—these are usually announced in advance and occur at fixed intervals (e.g., quarterly, semi-annually). Outside of these windows, the fund remains closed for transactions. This type of NFO is suitable for investors with a defined investment horizon who are comfortable with limited liquidity.
Also Read: Benefits of Mutual Fund Indexation
Before investing in a NFO mutual fund, it is important to understand if an NFO mutual fund is right for your mutual fund portfolio or not. Here are some key points to consider:
Investors should pay close attention to the NFO’s objectives and strategy, especially the sector, market capitalisation, or theme it targets. It is also important to know the background of the Asset Management Company (AMC) and the fund manager’s experience.
To evaluate the cost-effectiveness of the NFO, look at the expense ratio and other related fees, such as entry or exit loads, and contrast these costs with those of other NFO mutual funds.
When selecting a new NFO mutual fund, take into account your investment horizon, or the length of time you intend to remain invested. Matching the length of your investment with the plan's strategy can help you manage expectations and lessen the effects of market volatility.
NFO mutual funds carry market risks and limited track record, which can make it difficult to assess future growth potential. Investors will have to rely on the fund’s strategy and their own risk tolerance when investing.
Open DBS Treasures Account
If you're considering whether a New Fund Offer (NFO) suits your investment goals, here are some key factors to help you decide.
It’s also important to carefully assess NFO advantages and disadvantages to make calculated risk on investments and exit from this type of investment scheme.
The following is a detailed guide to investing in NFO mutual funds:
Investing in a New Fund Offer (NFO) presents unique advantages that can help investors enhance their portfolio with fresh opportunities and growth potential. Here are some NFO benefits investors can avail:
Also Read: How Mutual Funds Work
Investor seeking clarity on whether they should prefer NFO mutual funds over existing mutual funds can take a look at this table to understand the difference between NFO mutual funds and existing mutual funds.
Feature
NFO Mutual Funds
Existing Mutual Funds
Track Record
No past performance data: decisions are based on scheme objectives and fund house reputation.
Historical data available for review and analysis.
NAV at Entry
Launched at face value (usually ₹10 per unit).
NAV reflects market movements and fund performance.
Investment Strategy
May offer new or niche themes.
Typically follow established strategies.
Transparency
Limited initial disclosure; must rely on offer documents.
Ongoing disclosures and performance updates.
Liquidity
Becomes tradable only after listing (in case of closed-ended funds).
Generally, allows easy entry and exit.
Risk Level
Higher due to uncertainty and lack of data.
Risk can be better assessed using past performance.
Though often confused, NFOs and IPOs serve different purposes and operate under distinct frameworks. The table below outlines the key differences between the two.
NFO
IPO
Type of Investment
Units of a mutual fund scheme
Shares of a company
Ownership
No direct ownership in underlying assets
Partial ownership in the company
Regulation
Regulated by SEBI under mutual fund norms
Regulated by SEBI under stock market norms
Pricing
Typically launched at face value (e.g., ₹10)
Priced through fixed or book-building method
Risk
Depends on fund strategy and market conditions
Depends on company performance and market volatility
Return Potential
Based on fund manager’s performance and asset allocation
Tied to company growth and stock price appreciation
Several fund houses have launched new NFO mutual funds in 2025, offering investors opportunities to explore emerging themes and strategies. Below is an overview of some notable NFOs currently open for subscription as per AMFI India.
Fund Name
Fund House
Category
NFO Period
Min. Invest (₹)
Axis Services Opportunities Fund
Axis MF
Equity – Thematic (Services)
04 Jul – 18 Jul 2025
100
Sundaram Multi‑Factor Fund
Sundaram MF
Equity – Multi‑Factor
02 Jul – 16 Jul 2025
Groww Nifty 50 ETF / Index Fund
Groww MF
Others – Index / ETF
500
Invesco India Income Plus Arbitrage FoF
Invesco MF
Others – Arbitrage FoF
1,000
Nippon India MNC Fund
Nippon MF
Equity – MNC
Bandhan Multi‑Factor Fund
Bandhan MF
10 Jul – 24 Jul 2025
Franklin India Multi‑Asset Allocation
Franklin India MF
Hybrid – Multi‑Asset
11 Jul – 25 Jul 2025
5,000
SBI Nifty100 Low Volatility 30 Index Fund
SBI MF
Others – Index
08 Jul – 22 Jul 2025
ICICI Prudential Active Momentum Fund
ICICI Pru MF
Equity – Active Momentum
Quant Equity Savings Fund
Quant MF
Hybrid – Equity Savings
07 Jul – 21 Jul 2025
NFO mutual funds offer early access to new investment schemes but require thorough evaluation based on limited history of performance and greater exposure to risk. Aligning your investment choice with long-term financial objectives is critical. The DBS Treasures Premium Savings Account supports evolving banking and investment needs through personalised service, seamless account management, and access to curated wealth solutions.
Alongside investments, managing your finances smartly is equally important—opening an NRI Savings Account can help global investors seamlessly manage funds, repatriations, and cross-border banking needs while building a diversified portfolio.
