Simply Save | NFO rush: How should investors handle the deluge of new funds being launched by mutual funds?

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© Keerthana Sankaran Simply Save | NFO rush: How should investors handle the deluge of new funds being launched by mutual funds?

We are seeing a flood of new fund offers (NFOs), with new funds getting launched one after the other. While this gives lot of options to investors, but at the same time adds to confusion. Should they get into NFOs in the first place, and if they do, what should they keep in mind before getting into them?

There have been nine NFOs launched since last week and quite a few more are in the pipeline. The year has already seen a huge number of NFOs — 99 NFOs in 2021 — and looks like mutual funds want to launch several more before the year ends.

As these are new funds, they don’t come with a track-record. To be sure, several of these new funds are even industry-first funds. So, the investment exposure offered by some of these funds has never been offered before to mutual fund investors.

A new fund is offering exposure to blockchain industry, while some funds are offering exposure to international real estate, and an international fund that will give exposure to 23 countries. New fund houses also filing innovative funds, such as electric vehicles funds, or passive funds that can give investors a wide market exposure, including small- and micro-cap stocks.

NFOs also get heavily marketed by mutual funds, as well as mutual fund distributors. And investors are easier to convince with equity markets at record highs, and positive sentiments around the overall economic growth. This has also led to huge flows coming into NFOs.

To make sense of this NFO rush, in today’s Simply Save Podcast, Vishal Dhawan, founder and chief financial planner of Plan Ahead Wealth Advisors talks with Moneycontrol’s Jash Kriplani to bust some of the myths floated around to pull investors into NFOs, and how investors should decide which NFOs to pick and which ones to avoid.

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