RSS

Investing in NFO

11 May

ImageNFO [New Fund Offer] is always deemed as a risk. Everyone advises you to go for an existing MF, rather than invest in a NFO. One of the reasons being that, the existing funds have performance and past results to go by. But in case of NFO, its a big risk.

But then, investment itself is a risk. Even MFs can turn non-profitable if fund managers don’t do their job well. The kind of analysis we do before buying a MF, we can do a similar analysis of the AMC before investing in the NFO.

I have invested in quite a few NFOs, based on the past performance of the AMC who have managed successful MFs. Also, the asset allocation makes a difference too. As in the case of Sundaram Equity Plus fund where 35% was allocated to gold and rest 65% to equity. That made it an interesting assortment and I leapt towards that NFO. It perfromed pretty well and even touched a high of 11.02, which was a real positive.

Another NFO which turned out well for me was SBI Bluechip Fund [D]. It oaid great dividends in its first few years before the slow down. But then I burnt my finger in SBI PSU Fund.

Another point to note is the timing of the NFO. When you invest in a NFO while the market is bearish, then you will earn profits during bull run. But when you invest in a NFO which is launched during a bull run, taking advantage of rising sensex, then its a sham. It takes away the hard earned money as soon as the bull run dies down. This happened to me with Reliance Small Cap Fund [G]. I got the timing totally wrong.

Anyways, that has not deterred me. Just a few days back I went ahead and invested in two more NFOs. One was the IDBI India Top 100 Equity Fund and the other was Taurus Banking & Financial Services Fund.

The simple reason for this step was to take advantage of the situation where banking stocks have been beaten down and with falling sensex I can look to gain during a bull run. I could have also go in for a Banking Fund from any of the AMCs, but the NAV was quite high. For each unit purchased from existing MF, I can have 5 units here. And then, the %gain would be more or less the same, if they invest in similar banking stocks.

All I can say is, do not stay away from NFOs. The NFOs give us a chance to enter the market at a lower cost and more number of units. But do check on the market status since timing is everything.

This post was also published on Yahoo Network

Advertisements
 
2 Comments

Posted by on May 11, 2012 in lifestyle, mutual fund, nfo, personal finance

 

Tags: , , , , , , , ,

2 responses to “Investing in NFO

  1. gold price

    May 14, 2012 at 2:32 PM

    NEW DELHI: The mutual fund (MF) industry is abuzz with acronyms LIKE SMILE, TIGER, LION and COMMA as it seeks to create branded funds. With the industry characterised by intense competition, fund houses are increasing their advertising and marketing budgets and formulating branding strategies to differentiate their offerings. With the stock markets being on an uninterrupted bull run over the past 15 months and with new fund offerings (NFOs) registering record collections, a buoyant MF industry is likely to raise its marketing spend by about 70-80% in FY06.

     
  2. gold price

    June 3, 2012 at 2:03 AM

    2005 is likely to be remembered as a year when the two major mutual fund segments, i.e. equity funds and debt funds, pitched in starkly divergent performances. While equity funds (much to the glee of investors), rode the bull run, investors in the debt funds segment had little reason to cheer.

     

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
%d bloggers like this: