The launch of new fund offers (NFOs) has surged across a mix of index and hybrid mutual funds, giving investors early access to purchase units with a minimum investment before their public market launch.
Index funds follow a passive investment strategy, which is suited for a long-term buy-and-hold approach regardless of volatility. A hybrid fund invests in a mix of equity and debt, which is more suitable during volatile markets.
Here are the details of five new fund offers (NFOs), which are open for investment during March 18- April 7 period:
According to the latest Association of Mutual Funds in India (AMFI) data, index funds closed the February book with positive net inflows, with a 11,744 percent jump from Rs 27.30 crore in January to Rs 3,233.44 crore. Hybrid funds also surged nearly 31 percent from Rs 17,356 crore to Rs 11,983 crore in February.
While they present a wider choice, should you invest in an NFO just because it’s new?
Giving details of the latest NFOs, Anup Bhaiya, founder of Money Honey Financial Services, said in the current volatile environment, passive index funds are suitable for disciplined SIP investors seeking low-cost market returns. Hybrid funds appeal to investors seeking risk-adjusted returns.
The Edelweiss Nifty Large Midcap 250 index fund aims for growth while maintaining relative stability in volatile markets. Choice Mutual Fund’s passive offerings are low-cost and suited for long-term wealth creation. Zerodha’s Nifty Mid Small Cap 400 fund offers higher growth potential with greater volatility, while Jio BlackRock’s Large Cap Fund uses AI-driven active management for stock selection.
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“In a market shaken by geopolitical conflicts, NFOs provide a strategic clean slate for investors. Fund managers can pick up quality stocks at distressed prices during periods of volatility. As existing funds are tethered to past high-valuation entries, NFOs allow fund managers to deploy fresh capital directly into the current correction, picking up quality stocks at distressed prices,” said Bhaiya.
The financial adviser recommends aligning investments with risk profile, goals and time horizon. Assess expense ratios, tracking error, and the AMC’s track record before investing in an NFO, and avoid rushing into new launches — patience often pays off, he said.
Read more: Smallcaps to smart beta: March sees diversified mix of new fund offers
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