Is Spenny finally going to talk about Area 51? As similar as it may sound to the alien carrying device, NFO - New Fund Offer is something worlds apart (hehe, pun). New Fund Offer is to a Mutual Fund what crowdfunding is to a startup (loosely).
A bit puzzling, isn’t it? That’s why you’re seeing this stuff on Spenny’s blog section. So, stay with us till the end, and we hope next time an AMC prints a full-page ad regarding their new fund, it’d make much more sense than it does now.
The New Fund Offer is the initial fund offering by an AMC through which the fund provides the investors with a buy-in to a new fund. NFO is how the AMC raises funds to buy the assets for the funds.
Net Asset Value or NAVs are analogous to the price of a stock, the only difference boing that they represent equity while the NAVs represent the cost of a unit of assets. Unlike conventional stocks, the other difference is that one can buy partial assets based on the invested amount and the prevailing NAV.
The risk factor is decided based on the riskometer, consisting of 5 colours. The risk is determined based on the guidelines laid by SEBI regarding the underlying asset.