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New Fund Offer (NFO)


A New Fund Offer (NFO) is a term used in the financial sector to refer to the first-time invitation for subscription for a new scheme launched by investment companies or asset management companies. During the NFO period, the scheme is open to investors to buy units at a nominal price, often one rupee or ten rupees. Post the NFO period, new investors can buy units only at net asset value (NAV) based prices.


The phonetics of the keyword “New Fund Offer (NFO)” would be: New: /njuː/Fund: /fʌnd/Offer: /ˈɒfər/NFO: /ɛnˌefˈoʊ/Please note, these are in IPA (International Phonetic Alphabet) format, so the pronunciation may vary slightly based on accents and regional dialects.

Key Takeaways

  1. New Fund Offer: A New Fund Offer (NFO) is the first subscription offering for any new scheme launched by an investment company. Essentially it provides investors with the opportunity to invest in a brand new mutual fund, before it is available to the general public.
  2. Investment Period: NFOs have a specific investment time period. The fund house opens the funds for subscription for a limited period after which it’s closed. Once the NFO period is over, the investors can purchase the units of the mutual fund scheme at prevailing Net Asset Value (NAV).
  3. Risk and Return: Just like any other investment, investing in an NFO also comes with certain risk and return expectations. The performance of an NFO depends upon the market conditions and the strategy adopted by the fund manager. Therefore, investors are advised to thoroughly examine the New Fund Offer document, the investment strategy outlined, and the associated risks before investing.


A New Fund Offer (NFO) is critical in the world of business and finance as it provides an opportunity for investors to purchase units of a mutual fund or exchange-traded fund at its initial offering price. Typically, the NFO period is when a fund is first launched, giving investors a chance to get in at the ground level. This can be particularly advantageous if the fund performs well, offering potential for significant returns. Furthermore, during an NFO, fund managers often seek to raise a substantial amount of capital to invest according to their strategy, that may underpin the growth and expansion of the fund. Therefore, the NFO period can be an important event in the investment landscape, marking the inception of a new potential avenue for wealth creation and portfolio diversification.


The primary purpose of a New Fund Offer (NFO) is to raise funds for a new scheme in the mutual fund sector or for a close-ended fund. It’s the first-time subscription offer for a novel scheme launched by investment portfolios. They’re launched to enable the fund management firm to amass capital for purchasing securities. Investors are given the opportunity to buy units at an introductory low price. NFOs play a crucial role, not just for issuers but also for investors. For the issuer, it is an efficient means to raise adequate funds for various operations. From an investor’s perspective, NFO is an opportunity to invest in a fund at its lowest net asset value (NAV) when it is launched. When a mutual fund scheme is launched, its NAV is Rs 10 (most of the time) per unit. The investors buy at this lowest NAV and can gain considerable returns if the fund performs well over time. Besides providing the options to invest in equity, debt, and hybrid funds, it also helps diversify and boost the health of an investor’s portfolio over the long term. Thus, the NFO has substantial significance in the financial investment ecosystem, providing an effective instrument for both raising funds and investing.


1. “Axis Mutual Fund”: In 2020, Axis Mutual Fund launched its NFO titled “Axis ESG Equity Fund”. It aimed to generate long-term capital appreciation by investing in a diversified portfolio that follows the principles of Environmental, Social, and Governance (ESG) norms. 2. “Aditya Birla Sun Life AMC Limited”: In 2019, the company announced a NFO for “Aditya Birla Sun Life Retirement Fund” , intending to provide a retirement solution suited for various age and risk profiles of investors. 3. “ICICI Prudential Asset Management Company”: In 2019, the company launched a new fund called “ICICI Prudential Global Advantage Fund” targeting investments across four regions including US Market, Europe, Asia (including Japan), India with the view of taking advantage of global market conditions.

Frequently Asked Questions(FAQ)

What is a New Fund Offer (NFO)?

A New Fund Offer (NFO) refers to the first-time subscription offered by mutual funds to the public for purchasing its units. It is similar to an initial public offering (IPO) of stocks.

How does a New Fund Offer (NFO) work?

During the NFO period, the fund house allows investors to buy units of a mutual fund at a pre-determined price (usually $10/unit). After this period, units are available for purchase at the Net Asset Value (NAV) price determined at each day’s market close.

Why should I consider investing in a New Fund Offer?

An NFO might provide the potential for high returns as funds could invest in underserved markets or in innovative sectors. However, it’s always vital for investors to thoroughly research and understand the potential risks and rewards before investing.

How can I invest in a New Fund Offer?

You can invest in an NFO by filling out an application form provided by the fund house during the offer period. This form will ask for mandatory details like your name, address, PAN number, and investment amount.

What is the risk associated with investing in New Fund Offers?

As is the case with all investment vehicles, NFOs come with their share of risks. These risks could stem from market volatility, the fund’s investment strategy, or poor management by the fund house. Conduct thorough research and, if needed, consult with an investment advisor before investing in an NFO.

What is the pricing structure of a New Fund Offer?

Usually, all NFOs are priced at a flat rate (most often $10/unit) during the offer period. After that, the price depends on the NAV calculated at the end of each day based on the fund’s performance.

Can I redeem my investment during the NFO phase?

No, you cannot redeem your investment during the NFO phase. Redemption requests can only be made after the fund is available for general subscription post the NFO period.

How is a New Fund Offer different from an Initial Public Offering (IPO)?

An IPO is a means by which an unlisted company can get listed and offer its shares to the public, whereas an NFO is offered by mutual funds to the public for the first time. NFOs are open-ended; they can continue to sell unlimited quantities of units, whereas IPOs are for a limited number of shares.

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