An NFO or a new fund offer is the first subscription offered by an investment company for any new fund launched. It helps the firm to raise capital for purchasing securities.

The opportunity to subscribe to any new fund offer is available only for a limited period which is pre-defined. But as per the regulations circulated by SEBI, a new fund offering can stay active for a maximum of 30 days.

There are two types of NFOs - open-ended funds and close-ended funds.

Open-ended is officially launched after the NFO ends. It allows the investors to enter and exit the fund at any time post-launch. On the other hand a close-ended fund does not allow the entry and/or exit of investors after the NFO period, until its maturity.

A minimum subscription amount is usually specified for the investors, when an NFO is launched. This amount usually ranges in between Rs 500 to Rs 5000.

NFOs come with lock-in periods ranging from 3 to 5 years.

As an investor while deciding which fund to start investing in, you must do some research about the AMC, its sector allocation, fund type, scheme benchmark, risk meter, fund managers, objective of the scheme and peer comparison.

TBH