We all might have come across news about companies going public by launching their initial public offering (IPO). But you may not have heard much about a mutual fund scheme being launched by issuing a new fund offer (NFO). While both IPOs and NFOs are primary market offerings, one must understand the difference between the two to make the right investment choice.
Similar to an IPO, a mutual fund allows the public to invest in their pool for the first time through issuing NFO. However, in an NFO, investors have nothing to evaluate in terms of the scheme’s past performance. In such a situation, investors can look at the performance of other schemes by the fund house. This will help the investor understand the fund management philosophy and approach.
Lakshmi Iyer, President & CIO (Debt) and Head- Products, Kotak Mahindra AMC on Money9 MasterClass said that investors need to check their financial health before investing in IPOs or NFOs.
“It is very important for the investor to do a basic financial health check and consider one’s risk appetite before making the choice of investing in IPOs or NFOs or both,” Iyer said.
Watch the entire conversation to know more about IPOs and NFOs.
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