Guide to Mutual Funds
New Fund Offer (NFO)
What is an NFO (New Fund Offer) and how does it work?
Just like a public company offers its shares to the public via an Initial Public Offering (IPO), an Asset Management Company (AMC) offers units of the mutual fund to the public via a New Fund Offer (NFO) in the stock market.
The NFO is a process which attempts to raise capital to purchase securities for the mutual fund scheme.
The AMC prepares Offer Document (prospectus) for the NFO, and after getting permission from SEBI, decides a suitable time for launch in the market.
There are three relevant dates related to NFO -
It refers to the date on which the fund opens for subscription to the public.
It refers to the date on which the fund closes for subscription to the public.
Subscription Reopening Date
After the NFO is over, the scheme will be open for entry and exit as it will now be a listed fund. The date at which the fund becomes available for trading in the stock market is the subscription reopening date.