If we look at the country this year, on an average one or two IPOs have been listed in the market every week. Many times IPOs have been seen getting listed on all days of the week. The special thing is that this year Tata Tech’s IPO broke the record of highest number of subscribers of LIC. Investors took advantage of these events and also made profits. Amidst all this, this year mutual fund houses also introduced many NFOs. They also gave decent returns to investors. In today’s story we will learn about NFO. We will also try to take a look at the process of investing in it.
What is the difference?
NFO and IPO both are finance terms, but there is a difference between them. NFO stands for “New Fund Offer” which refers to the initial stage launch of a new mutual fund or exchange traded fund (ETF). When an AMC (Asset Management Company) launches a new fund, it offers it as an NFO. It provides an opportunity to buy new funds in which investors can invest money in new funds. On the other hand, IPO means “Initial Public Offering” which is the process of bringing shares in the market for the first time after the establishment of a company and provides an opportunity to people to become shareholders of that company.
The main difference between NFO and IPO is that NFO reflects a new investment activity, whereas IPO is the process of bringing shares of a company to the market. In both, new and first-time investors get an opportunity to invest, but these are two different processes. Both require a demat account. Through NFO a new investment unit is provided to the investors by launching new funds, whereas in IPO the company delists its shares and brings them in the market.
How can you invest?
If you are thinking of investing, then just as companies give information to the market before launching an IPO, similarly mutual fund houses also give information to the market before launching the NFO. A fixed time is fixed for investing money in NFO. During that time you can invest monthly or lump sum. The limit of money in NFO of each unit can be more or less. If you have a Demat account then you can invest money in NFO of mutual funds through apps like Groww, ET Money and Paytm.