NFOs: Myth and Reality
I get lot of queries from investors to invest in NFOs as they have low NAVs and can get more units..Now lets dive into Myth and Reality
Myth:
1. They have low value and hence investor can get more units
2. As the managers will invest fresh so they can invest in better stocks
Reality:
1. Funds value increase decrease on percentage basis not on NAV basis..Rather funds having higher NAV shows the consistent performance of the fund and it's reliability over the time and above all performance of manager managing that fund
2. Lot of NFOs have been bad performers and few are high performing as well so that myth is also not true
3. Always look at manager managing the new fund as a good manager get fresh money and have chance to do fresh investment that may lead to good performance of the funds but not necessary that it will outperform the already existing funds
4. Also it's not necessary that you invest only during the NFO period, once it's listed then you can do your lump-sum and SIP even after NFO gets closed in the open ended funds like L&T Index fund that closed just few days back will open again for subscription.. However there are few closed end funds which are never suggested until unless they offer good value on table.
5. Some advisers push investors for investing in some NFOs particularly close ended as they may get higher percentage of commission.
6. As written above all NFOs may not be bad but you can't judge their performance on past history basis.
2. Lot of NFOs have been bad performers and few are high performing as well so that myth is also not true
3. Always look at manager managing the new fund as a good manager get fresh money and have chance to do fresh investment that may lead to good performance of the funds but not necessary that it will outperform the already existing funds
4. Also it's not necessary that you invest only during the NFO period, once it's listed then you can do your lump-sum and SIP even after NFO gets closed in the open ended funds like L&T Index fund that closed just few days back will open again for subscription.. However there are few closed end funds which are never suggested until unless they offer good value on table.
5. Some advisers push investors for investing in some NFOs particularly close ended as they may get higher percentage of commission.
6. As written above all NFOs may not be bad but you can't judge their performance on past history basis.
always remember
Never get carried away by NAVs of the fund to invest
Never get carried away by NAVs of the fund to invest
Happy Investing....
SUNRISE FINANCIAL SERVICES
9552244699
SUNRISE FINANCIAL SERVICES
9552244699
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