NFOs: A look at investment options and factors you should consider

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After a slowdown in the April-June quarter last year, the mutual fund industry launched 104 new fund offers (NFOs) towards the end of 2020. The year 2021 is no different as fund houses have already lined up 29 NFOs in the first three months of fiscal 2021-22.

NFO is the first subscription offering for a fund by a mutual fund company. Generally, investment in NFO is considered risky because it does not have any past performance. But at the same time, it gives you the opportunity to invest at a level that is able to generate noticeably better gains post-listing.

However, investment in NFO should be considered only if it is investing in an entirely different category or sector by providing a unique opportunity to invest that does not exist in current products.

The size of the fund house, the performance of other funds from that AMC, and the fund manager’s track record should be considered before selecting an NFO, according to Pankaj Mathpal, MD, Optima Money Manager.

Here are the top-5 NFOs that you can look at for investment options:

Aditya Birla Sun Life Multi-Cap Fund: The scheme aims to achieve long-term capital growth, at proportionate levels of risk through diversified research-based investment in Large, Mid & Small cap companies. The fund will allocate 25% in each of these segments. The rest of the money will be invested other than the stock market. The NFO opened on April 19 and will close on May 3.

HDFC Asset Allocator Funds of Funds:

Asset Allocator means investing in multiple segments. This is an open-ended FoF scheme that aims at capital appreciation by investing in equity-oriented, debt-oriented, and gold ETF schemes. HDFC AMC is the second-highest fund house in the Country. The Investment starts at Rs 5000. This NFO is currently open and will close on April 30.

Axis AAA Bond Plus SDL ETF

Axis Mutual Fund launched AAA Bond Plus SDL ETF – 2026 Maturity on 23rd April. It will invest in bonds of companies that are AAA rated and those with state development loans. The NFO will invest in AAA bonds because they are the best in terms of security. However, in some cases, even these default and you may find it difficult to achieve your goal. The Investment starts at Rs 5000. The NFO will close on May 7.

Canara Robeco Focused Equity Fund:

Canara Robeco Mutual Fund has launched a Focused Equity Fund. It is an open-ended equity scheme that will invest in a maximum of 30 shares. It aims to invest in equity and related instruments across market capitalization. The company claims to be called a focussed Flexi-cap fund. You can invest in this fund with Rs 5000. The NFO is open for subscription until May 7, 2021.  The fund aims to create long-term wealth for its investors.

Mirae Asset NYSE FANG+ ETF

Mirai Asset Mutual Fund has launched NYSE Fang ETF. It is an open-ended fund that will invest in stocks listed on the New York Stock Exchange in technology and consumer-focused companies like Amazon, Google, Facebook, and Netflix. Swarup Mohanty, CEO of Mirae Asset Investment Managers (India) said that investors will be able to participate in this global growth story and also diversify your Investment basket. The NFO is open until May 3.

(Disclaimer: The above list is for informational purpose only. Before investing, please consult your financial advisor)