What is an NFO? New Fund Offer Meaning, Types & Process

What is an NFO?

  1. An NFO (New Fund Offer) is used to offer units of a mutual fund scheme to public investors for the first time. 
  2. NFOs, except for ELSS (Equity-Linked Savings Schemes), can remain open for a maximum of 15 days. 
  3. The allotment of units or refund of the amount is done within five business days after the scheme's closure. 
  4. An NFO is announced by an AMC (Asset Management Company) to raise capital for launching a new mutual fund scheme. 
  5. It provides all the essential information about the fund, such as the shares to be purchased, details of the fund manager, and the benchmark against which the fund will be measured. 
  6. NFOs are primarily of two types: open-ended and close-ended.

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