#nfo nav

[fgeruiferouiaw]

Groww Nifty 1D Rate Liquid ETF NFO का परिचय:

ग्रो एसेट मैनेजमेंट लिमिटेड की नई पेशकश, Groww Nifty 1D Rate Liquid ETF, एक एक्सचेंज-ट्रेडेड फंड है जो Nifty 1D Rate Index की नकल करता है। यह फंड 16 सितंबर, 2024 से 20 सितंबर, 2024 तक सब्सक्रिप्शन के लिए खुला रहेगा और 07 अक्टूबर, 2024 से लगातार खरीद और बिक्री के लिए उपलब्ध होगा। Groww Nifty 1D Rate Liquid ETF NFO विशेष रूप से उन निवेशकों के लिए है जो कम जोखिम और उच्च तरलता की तलाश कर रहे हैं।

मुख्य विशेषताएं:

Opening Date: 16 सितंबर, 2024

Closing Date: 20 सितंबर, 2024

न्यूनतम निवेश: ₹500

बेंचमार्क: Nifty 1D Rate Index

तरलता: उच्च

जोखिम: कम जोखिम

Nifty 1D Rate Index क्या है?:

Nifty 1D Rate Index रात्रिकालीन बाजार की उधारी दरों पर आधारित है, जो निवेशकों को अल्पकालिक नकदी प्रवाह प्रबंधन के लिए एक अच्छा विकल्प प्रदान करता है। यह फंड मुख्य रूप से कम जोखिम वाले रिवर्स रेपो और सरकारी प्रतिभूतियों में निवेश करता है।

किसके लिए उपयुक्त है?:

रूढ़िवादी निवेशक: जो कम जोखिम और उच्च तरलता के साथ अपने निवेश को सुरक्षित रखना चाहते हैं।

अल्पकालिक निवेशक: जो अप्रत्याशित खर्चों के लिए पैसे को तरल रखना चाहते हैं।

निष्कर्ष:

Groww Nifty 1D Rate Liquid ETF उन निवेशकों के लिए एक बढ़िया विकल्प हो सकता है जो कम जोखिम के साथ अपने पोर्टफोलियो को सुरक्षित और विविध बनाना चाहते हैं। यह फंड अल्पकालिक नकदी प्रवाह प्रबंधन के लिए उपयुक्त है।

Disclaimer: निवेश से पहले प्रमाणित निवेश सलाहकार से परामर्श लें। Finowings आपके किसी भी प्रकार के लाभ या हानि के लिए जिम्मेदार नहीं होगा।

[wealthifyme]

What Are the Benefits of NFO as per a Mutual Fund Distributor in Faridabad?

Most people are not aware that new fund offerings (NFOs) can be a great way to start their mutual fund investment journey. This is where a mutual fund distributor in Faridabad steps in, helping investors understand why NFOs can be a valuable option. NFOs give investors a chance to invest in a new mutual fund at its initial offer price, typically ₹10 per unit, which can be a compelling entry point.

What is an NFO?

An NFO (New Fund Offer) is the first-time sale of units in a new mutual fund scheme by an asset management company (AMC). During the NFO period, the fund is offered to investors at a fixed price. After this initial period, the fund units can be bought or sold at the market-determined Net Asset Value (NAV).

Benefits of Investing in an NFO

Low Initial Investment Price: NFOs offer units at a fixed price, usually ₹10 per unit, allowing investors to buy more units initially. If the fund performs well, this can lead to higher returns over time. If you wish to know more, reach out to an AMFI registered mutual fund distributor in Faridabad, like WealthifyMe.

Potential for Growth: NFOs often focus on emerging sectors, giving investors a chance to participate in early-stage growth, which can lead to significant returns in the long run.

Portfolio Diversification: NFOs introduce unique strategies or sectors not available in existing funds, helping investors diversify their portfolios across different market segments.

Innovative Strategies: Many NFOs focus on trending sectors like technology or renewable energy, offering fresh opportunities that traditional funds may not.

Tailored Investment Solutions: NFOs are often designed to meet specific investor needs, and mutual fund distributors can help match the right NFOs to individual financial goals.

Professional Management: NFOs are managed by experienced fund managers who use their expertise to make the most of market opportunities.

Exposure to Untapped Markets: NFOs can target sectors or regions not covered by existing funds, offering investors new opportunities for growth.

Tax Benefits: Certain NFOs, such as ELSS, provide tax deductions under Section 80C, offering both investment growth and tax savings.

Conclusion

NFOs are a great investment option for people who wish to make the most of new opportunities in the market. While NFOs may not always guarantee immediate returns, they provide the potential for long-term growth, especially when aligned with emerging trends or niche sectors.

[pankajbansal89newspatrolling]

What is NFO ?

NFO stands for "New Fund Offer." It is a term used in the context of mutual funds and investment. Here’s a brief overview:

Definition: NFO is the first-time subscription offer for a new mutual fund scheme that is launched by an asset management company (AMC). It is similar to an Initial Public Offering (IPO) in the stock market, where a company offers its shares to the public for the first time.

Purpose: The main objective of an NFO is to raise capital to invest in securities according to the fund's investment objectives.

Pricing: During the NFO period, units of the mutual fund are typically offered at a nominal price, usually ₹10 in India.

Types: There are different types of NFOs, including equity funds, debt funds, and hybrid funds, each with varying risk and return profiles.

Investment Process: Investors can subscribe to the NFO during the offer period, after which the fund is launched and units are allocated based on the amount invested.

Advantages and Risks: NFOs offer an opportunity to invest in new strategies or sectors. However, they also carry risks as the fund’s performance is unproven and there is no historical data to review.

Types of NFOs

Open-Ended Funds:

Investors can buy and sell units at any time after the NFO period.

The fund does not have a fixed maturity date.

The units are purchased at the prevailing Net Asset Value (NAV).

Close-Ended Funds:

Investors can buy units only during the NFO period.

The fund has a fixed maturity date.

Units can be traded on the stock exchange after the NFO period, but no new units are issued after the NFO.

Reasons to Consider Investing in an NFO

New Investment Opportunities:

Access to new themes, sectors, or strategies that were previously unavailable.

Pricing Advantage:

Units are often priced attractively at a nominal value, typically ₹10 per unit in India.

Portfolio Diversification:

NFOs can help diversify your investment portfolio by adding new asset classes or sectors.

Risks Involved

Unproven Track Record:

The fund has no historical performance data, making it difficult to assess potential returns.

Market Risks:

Like all mutual fund investments, NFOs are subject to market risks. The value of the investment can go up or down based on market conditions.

Liquidity Concerns:

For close-ended funds, liquidity can be an issue since units can only be sold on the stock exchange if a buyer is available.

How to Evaluate an NFO

Fund Objectives and Strategy:

Understand the investment objectives and strategy of the fund. Ensure it aligns with your financial goals and risk tolerance.

Fund Manager’s Track Record:

Research the track record of the fund manager and the asset management company (AMC) to gauge their expertise and reliability.

Expense Ratio:

Check the expense ratio of the fund, which indicates the cost of managing the fund. A lower expense ratio can result in higher net returns for investors.

Scheme Information Document (SID):

Review the SID for detailed information about the fund’s objectives, risks, and other important details.

Process of Investing in an NFO

Application:

During the NFO period, investors can apply for units through their bank, broker, or directly through the AMC’s website.

Allotment:

After the NFO period closes, units are allotted to investors based on the amount invested. This process can take a few days.

Listing and Trading:

For close-ended funds, units are listed on the stock exchange where they can be traded. Open-ended funds allow for continuous buying and selling at NAV.

Post-NFO Considerations

Performance Monitoring:

Regularly monitor the performance of the fund against its benchmarks and peers to ensure it meets your expectations.

Rebalancing:

Periodically review and rebalance your investment portfolio to align with your financial goals and market conditions.

BY: Pankaj Bansal , Founder at NewsPatrolling.com

[emilyj90]

Types of NFO: Initial Investment Opportunities

What Is an NFO? A New Fund Offer (NFO) refers to a new fund or scheme available for public subscription. Think of it as the debut of a new product in the financial market. During the NFO stage, investors have the chance to buy units of the fund at its Net Asset Value (NAV), typically set at a basic price.

This NFO period is a short-term opportunity, after which the fund becomes available for regular transactions at current market rates.

5 Advantages of Investing in NFO

Lower Entry Cost New Fund Offers give an affordable entry point for investors. This lower initial cost lets you acquire more units for less money, potentially paving the way for greater long-term gains.

Innovative Investment Strategies New Fund Offers bring new and different ways to invest your money that you won’t find in other, already-existing investment funds. This gives investors a novel path for diversifying their portfolios and possibly earning higher returns, especially if managed by a competent fund manager.

Potential for Higher Returns New Fund Offers, being new and generally smaller in asset size, can adapt more swiftly to market trends. This nimbleness can be capitalized on for higher returns, particularly if the fund is well-managed.

Early Access to Themes or Sectors New Fund Offers can provide a first-mover benefit in emerging sectors or themes not yet fully explored by existing funds. This early entry can be especially profitable if the sector or theme gains traction.

Transparency New Fund Offers ensure transparency to investors. New funds usually face more scrutiny from both regulators and investors, ensuring a higher degree of transparency in their operations and performance metrics.

How to Invest in an NFO

Research and Identify Research the NFO meaning thoroughly. Look into the fund’s investment objective, the track record of the fund manager, and the sectors or themes it focuses on.

Read the Offer Document Read the offer document or prospectus carefully. It contains vital information about the fund, including its investment strategy, risk factors, and fees.

Choose the Investment Amount Decide how much you want to invest. NFOs often have a minimum investment requirement, so make sure you meet that.

Complete KYC Formalities Complete KYC (know-your-customer). If you’re a first-time mutual fund investor, This usually involves submitting identification and address proof.

Make the Investment Make the Investment once your KYC is complete. You have two primary options: online and offline. For the online method, you’ll need to create or log into an account on the asset management company’s website or a trusted mutual fund platform.

For the offline method, you can consult a certified financial advisor or visit the nearest branch of the asset management company.

Monitor Performance Monitor performance after your investment is made. It’s essential to monitor the fund’s performance against its benchmarks and your own investment goals.

Learn more detail: https://finxpdx.com/types-of-nfo-new-fund-offers-initial-investment-opportunities/

[rahulshevde]

What Are Closed-Ended Mutual Funds?

You can categorize mutual funds into open-ended, interval, and closed funds based on their structure. The basis of this categorization is the frequency at which you are allowed to sell or buy the units in such a scheme. Closed-ended funds may not be as popular or as common as open-ended funds but they are becoming rather prevalent these days! 

What are closed-ended funds? 

A closed ended mutual fund can be described as a debt or equity fund that is issued by a fund house and contains only a certain number of units. After the end of the NFO (new fund offer), investors are not allowed to redeem or purchase units from such a fund. They are launched through NFOs and traded afterward in the market as stocks are. 

Advantages of closed-ended mutual funds 

Closed-ended mutual funds provide fund managers with stability, their market price depends on demand and supply, and they offer you a certain amount of liquidity. As in these funds, investors cannot redeem their units before a maturity date the fund managers get a set asset base that they can work with. If there is a high demand for the units and a low supply they can sell at a much higher price than the fund’s NAV (net asset value).

Disadvantages of closed-ended mutual funds

The main issues with closed-ended mutual funds investment are lack of great performance in the past, lack of SIP, and high dependence on fund managers. If you judge the past performance of these funds you will see that they do not always measure up to open-ended funds. Also, since you can buy them only during the NFO period you need to invest a lump sum. 

Who should invest in a closed-ended mutual fund?

Closed-ended funds need lump sum investment and you cannot redeem them until maturity. This is why you must have a substantial corpus to invest in this case and your investment horizon must also be in line with the maturity period of the same if you want to invest in these funds. It is also important in these cases to assess the returns and risks before investing.

In these cases, you can invest straight away through AMCs (asset management companies) that offer top-class trading apps such as such as m.Stock or get help from distributors and agents. If you decide to invest in a direct plan you will get to invest in a lot of units without paying any commission.

[aabofficial]

The Power of NFOs: Maximizing Returns in Mutual Funds

Introduction

Investing in mutual funds has become increasingly popular among individuals looking to grow their wealth and achieve financial goals. However, navigating the world of mutual funds can be daunting for newcomers, especially when faced with complex terminology like NFO. In this article, we will delve into the concept of NFO in mutual funds, its significance, and how it can impact your investment decisions.

1. Understanding NFO (New Fund Offer)

The first step towards comprehending NFO in mutual funds is understanding what it stands for - New Fund Offer. NFO refers to the initial subscription period when a mutual fund scheme is launched by an asset management company (AMC). During this phase, investors have the opportunity to invest in the newly launched scheme and become its unit holders.

2. How does an NFO Work?

Once an AMC decides to launch a new mutual fund scheme, it sets a fixed duration called the NFO period. This period typically lasts for a few weeks and serves as an open window for investors to subscribe to the scheme. Investors can purchase units of the NFO either directly from the AMC or through authorized intermediaries.

3. Benefits of Investing in an NFO

Participating in an NFO offers several advantages to investors. Firstly, NFOs are often launched at an initial net asset value (NAV) of Rs. 10 per unit. This gives investors the opportunity to accumulate a significant number of units at a relatively lower cost compared to existing schemes with higher NAVs.

Secondly, NFOs provide investors with a chance to enter the market at an early stage. Since these schemes are new, the fund manager has the flexibility to invest in diverse securities and sectors, potentially offering higher growth prospects.

4. Factors to Consider Before Investing in an NFO

While NFOs present exciting opportunities, it is crucial to consider certain factors before investing. Firstly, investors must thoroughly research the AMC launching the NFO. Examining the company's track record, performance of existing schemes, and the expertise of the fund manager can provide valuable insights.

Next, it is essential to evaluate the investment objective and strategy of the NFO. Understanding the fund's focus, asset allocation, and risk level can help investors determine if it aligns with their financial goals and risk appetite.

5. Risks Associated with Investing in an NFO

As with any investment, NFOs come with their own set of risks. Since NFOs lack a performance track record, it becomes challenging to assess the fund's potential return and risk level accurately. Additionally, the fund manager's experience with managing a new scheme might be limited, further adding uncertainties.

6. When to Invest in an NFO?

Investing in an NFO requires careful timing. While some investors prefer to participate during the initial phase to avail lower NAVs, others wait for the NFO to mature and gain a performance track record. Deciding on the right time depends on an individual's investment goals, risk tolerance, and confidence in the AMC and the fund manager.

7. NFO vs. Existing Mutual Fund Schemes

One common dilemma faced by investors is whether to invest in an NFO or an existing mutual fund scheme. Existing schemes have an established track record and historical performance data, which can assist investors in making informed decisions. On the other hand, NFOs provide the opportunity to invest in a new, potentially high-growth scheme at a lower NAV.

8. Conclusion

In conclusion, NFOs in mutual funds offer investors a chance to enter new schemes at an early stage and accumulate units at an affordable NAV. However, thorough research, understanding of the AMC's track record, and evaluating the investment strategy are imperative before investing in an NFO. It is essential to consider one's financial goals, risk tolerance, and confidence in the fund manager when deciding to participate in an NFO.

FAQs

Q1. Can I invest in an NFO without a demat account?

Ans : Yes, investors can invest in an NFO through both demat and non-demat accounts. While demat accounts are typically used for purchasing existing schemes, non-demat accounts facilitate the purchase of NFO units.

Q2. Are NFOs less risky than existing schemes?

Ans : NFOs and existing schemes carry their own level of risk. NFOs lack a performance track record, making it challenging to assess risk accurately. Existing schemes, on the other hand, have historical data that helps evaluate risk levels.

Q3. How long does an NFO period usually last?

Ans : NFO periods generally last for a few weeks, typically ranging from 15 to 45 days. However, the duration may vary depending on the AMC and the specific scheme.

Q4. What happens at the end of an NFO period?

Ans : At the end of the NFO period, the scheme is closed for new subscriptions. Afterwards, the mutual fund units are listed on the stock exchange, and investors can purchase or sell them based on its NAV.

Q5. Are NFOs suitable for short-term or long-term investment?

Ans : NFOs can be suitable for both short-term and long-term investments, depending on the investment objective and strategy of the scheme. Investors should align their investment duration with the fund's objective to maximize returns.

Read more : what is NFO in mutual funds?

[zebu-helan]

What Is NAV And How Is It Calculated?

You might want to know what NAV stands for if this is your first time making an investment in a mutual fund. The cost of each unit of a mutual fund is expressed as "net asset value," or NAV. Every day, the NAV is determined using the closing prices of all the securities that the various mutual fund schemes possess. The NAV is based on all of the securities' closing values, unlike share prices, which fluctuate often during trading hours. A mutual fund scheme's expenses, including fund management, administration, distribution, etc., are deducted in proportion to the assets of the scheme and are represented in the NAV.

How do you figure out NAV?

Once you know what NAV is, you should be curious about how it is decided.

Through a "new fund offering," a mutual fund company (AMC) solicits participants in a new scheme (NFO). Each unit of a plan in an NFO costs Rs. 10. Let's assume that the AMC receives Rs 1,000 crores from various investors during the NFO. The fixed issue price of Rs 10 for NFO subscribers means that the AMC distributes units to investors in accordance with the amount of funds raised. In this case, the NFO raised Rs 1 trillion, and the NAV was fixed at Rs 10.. As a result, the AMC issues 100 billion units (1,000 billion rupees / 10 rupees NAV) and distributes them to investors according to their investment amounts. Therefore, if you donated this NFO Rs 1 lakh, you would receive 10,000 units in return. So now you are aware of how NAV is determined.

Let's take a closer look at this. The Rs 1,000 crores raised in the NFO are invested in a variety of assets in accordance with the program's mandate. These items' market values fluctuate every day. Let's also assume that the portfolio of assets for the scheme increases in value the following day from Rs 1000 crore to Rs 1020 crore. To keep things easy for now, let's ignore the plan's costs. The NAV of the scheme will be Rs. 10.2. 100 billion outstanding units divided by Rs. 1,020 billion equals Your initial NFO investment of Rs. 1 lakh is now worth Rs (10,000 units x Rs 10.20 NAV).

Investors in open-ended mutual fund schemes can purchase or sell units at any time using the NAV for the day. Investors can sell their shares for the original purchase price if there is no exit load (exit load is a charge applied by the scheme for redemptions within a certain specified period). In other words, NAV refers to the price at which investors can purchase or sell mutual fund units.

What does the net value of an asset mean for investors?

The NAV: Does it really matter? Only the NAV determines how many units you receive for your investment. If you're an investor, the value of your investment should be more important to you than the quantity of units you hold. More significant than the NAV itself is the NAV growth of a plan. In other words, return should be prioritized over NAV.

NAV's impact on a fund's performance

Because NFOs are sold at a NAV of Rs. 10, some investors believe they are inexpensive. The value of the securities a mutual fund unit owns and the total profit it has generated since the start of the scheme are used to determine the NAV of that unit. Despite the fact that two distinct mutual fund schemes may have the exact same portfolio of securities and could even have different NAVs, both will have the same intrinsic value.

Therefore, it is not a good idea to gauge the performance of a mutual fund scheme by looking at its NAV. Investors should constantly consider a number of factors, including the total cost of the investment and how well it has performed historically, before making a decision.

Conclusion

NAV's definition and how to interpret it have been discussed. The NAV is only used to determine the number of units that will be distributed to your investments. No matter what the NAV was when you purchased the units, what matters is how much their value has increased. The development of NAV is far more significant than NAV. You ought to be in a better position to make investment selections now that you are aware of NAV.

[michaelclarke971]

Important Questions to ask your Financial Consultant

Confused about how to kick off your relationship with your newly hired financial consultant? Here are four important questions to get you started! Am I on track to meet my future goals? It’s a fact that most of us save in an ad-hoc way; although we Indian’s fare reasonable well as savers in terms of the quantum of money they put away on average (our country’s savings to GDP ratio stands at roughly 30%), we’re not goal oriented with our savings. When asked whether their regular savings are sufficient, or being properly channelized towards their future goals, most clients draw a blank. A Financial Consultant can help you create a roadmap for your future, defining important time bound milestones and calculating inflation adjusted Rupee amount requirements at each of them. This exercise can be quite cathartic, and lead to a deeper focus with respect to one’s regular savings. In case your current surpluses are insufficient in terms of your future goal requirements today, you can always get started with a smaller amount right now, while asking your financial consultant to keep an eye on the big picture. Do I need to junk any of my existing life insurance policies? Our undesirable collective habit of signing up for Life Insurance plans to save taxes often leads to the accumulation of poor performing life insurance plans. Your financial consultant can help you here. Over time, you may have signed up for low yielding traditional plans that would be best made paid up, or expensive ULIP’s whose funds are consistently underperforming Mutual Funds while providing you nothing more than a sliver of life coverage! It’s not uncommon for a financial consultant to come across clients with fifteen of twenty policies adding up to several thousand rupees of premiums per month. Dig up those dusty papers, get them together and put your financial consultant to work. Quickly figure out which policies are worth carrying on and which ones you’ll be better off putting down. Am I adequately insured? It’s a terrible paradox that most of us remain under-insured with respect to health insurance and even term insurance, despite our country’s obsession with life insurance. What’s behind this phenomenon? Primarily, the fact that we misunderstand insurance to be an investment, and hence avoid pure risk coverages. Sit with your financial consultant and evaluate your coverage requirement from a pure risk transfer standpoint, keeping in mind your number of dependents and their inflation adjusted expenses, as well as their important future goals. Your financial consultant should be able to arrive at an adequate term coverage depending upon your unique needs. Besides Life Insurance, ask your financial consultant if you need to up your health insurance coverage or switch over from your current plan to another plan. A single medical emergency can deal a crippling blow to your personal finances, so it’s best to have that base well-covered. Do I need to consolidate my Mutual Funds? Many investors end up making bite sized investments into tens of Mutual Funds, either goaded by well-meaning friends or smart marketing tactics. The fallacious belief that NFO’s are a good bet due to their “low NAV” further exacerbates this. Over the years, this could lead to a phenomenon called “over-diversification” which could in fact counterintuitively start affecting your portfolio returns negatively. Additionally, a scattered Mutual Fund portfolio will almost always not be in sync with your ideal risk profile. A financial consultant can help you concentrate your investments into the best equity and debt funds, based on your individual financial goals. Giving your portfolio a facelift could actually add some additional annualized returns to your Mutual Fund portfolio; which could, in the long run, help you with the achievement of your goals. Ask your financial consultant if your mutual fund portfolio needs a revamp!

[quantumamc]

Mutual Fund Types and how do you choose

Mutual Funds are of many kinds and it’s easy to get lost even for an experienced investor amongst the wide array of funds available to you in the market.

To enable our investors to pick the best mutual fund to achieve their financial freedom, let’s understand in details, the ways in which mutual funds are classified.

Mutual funds can be classified on the basis of investment objective or on the basis of maturity period.

Closed vs. Open-Ended Funds

Open ended Funds

1.       Subscription: Open ended Funds offer units for sale without specifying any duration for redemption.    

2.       Selling price: Redemption value is on the basis of the ongoing NAV

3.       Maturity: Doesn’t have a set number of shares or maturity period

4.       How is it traded: Not traded on the open market (like stocks), NAV of such schemes is generally less fluctuating

5.       Liquidity: Can be redeemed anytime

Closed-ended funds

1.       Subscription: Subscription opens at the time of New Fund Offer (NFO) and for a defined period only.

2.       Selling Price: Price varies depending on supply and demand

3.       Maturity: Set number of shares and a fixed maturity period.

4.       How is it traded: Listed on a recognised stock exchange. They can be traded at any time of the day when the market is open

5.       Liquidity: Fixed lock-in time period, however can be bought and sold on a recognized stock exchange where they are listed.

Mutual fund can be categorized as per asset classes. Broadly, they can be classified under the following seven broad categories:

1.       Equity Mutual Fund

2.       Debt Mutual Fund

3.       Gold Mutual Fund

4.       Multi Asset Fund

5.       Hybrid Mutual Fund

6.       Solution Oriented Schemes and

7.       Other Mutual Fund

Knowing which fund is right for you is essential to making confident investment decisions to grow your wealth in a sustained manner.

Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.

Mutual fund investments are subject to market risks read all scheme related documents carefully.

[banarjeenikita]

Passive Funds

John Bogle launched the first passive mutual fund ‘Vanguard S&P 500 index fund’ in 1975 with the aim of providing mutual funds at a low cost for retail investors, creating a revolution in the mutual fund industry. Globally, majority of investors have shifted to passive funds, where assets under management (AUM) of these passive funds stand around USD 11 trillion. Presently, similar trends are visible in India.

India’s passive funds’ AUM stand around INR 5 lakh crore, which is around 13% of the total AUM in the country. In just the last year, passive funds have grown more than 60% and around 93 new funds have been introduced in ETF, Index, and Fund of Funds (FoF). Only 5% of Indians invest in mutual funds whereas in developed countries like the US, mutual fund investors are around 45%. This showcases a huge potential for growth in India in the mutual fund sector.

Under passive funds, tracking error is one of the important factors to be looked at while investing. This represents how well a fund manager replicates index stocks in a portfolio. The lower the tracking error, the healthier the fund is.

The second most important factor is the expense ratio. Passive funds are known for lower expense ratios as there is no active management involved. Hence, the lower the expense ratio, the better are the returns.

And finally, the liquidity of the fund on the exchange platform is another significant factor to be looked at. Higher liquidity is better for investors.

Currently in India, the average tracking error of index funds is 0.17%, the average expense ratio of ETF funds is around 0.25% and Index funds is 0.8%.

Passive investment is one of the simplest and among the most trending in the Indian financial market.

SEBI has taken a lot of developmental steps to increase passive funds investment in India.

Improve liquidity – Under ETFs, asset management companies (AMCs) must appoint at least 2 market makers to provide liquidity

Incentive plans – Incentive plans for market makers to encourage them

Unit creation – Directly with AMC only for transactions above INR 25 crores. This can help increase the volume of transactions and improve demand and supply

Passive ELSS Funds – AMCs can launch ELSS funds which are ETF/Index based comprising top 250 stocks subject to having only 1 ELSS scheme. This means an AMC can have either active ELSS funds or passive ELSS funds. There is a lot of scope for newer AMCs to launch passive ELSS funds if they do not have ELSS funds on their rack

Tracking Error – Tracking error is capped at 2% for equity funds and is calculated on 1-year rolling data and is disclosed daily. For debt passive funds tracking difference is capped at 1.25% average over the last 1-year period

NAV – Valuation of FOFs will be based on the closing price of the ETF, and not the NAV. The NAV is to be disclosed on a continuous basis with a 15 sec lag for equity ETFs and at least 4 times a day for debt ETFs

Debt ETF & Index funds – SEBI allowed AMCs to launch 3 new debt categories of passive debt funds. Corporate debt ETF/index funds, G-sec ETF/Index fund, Hybrid debt ETF/Index fund. This will again help improve the volume in the passive category

NFO – Minimum subscription amount in a New Fund Offer (NFO) for equity and debt ETF/Index funds is reduced to INR 5 crores and INR 10 crores respectively

Expenses of Investor awareness programme – IAP expenses has been reduced from 2 bps to 1 bps

Invest in the best asset class which suits your requirement, because #FinancialWellnessMatters.

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What is NAV (Net Asset Value)

The market value of all securities held by the mutual fund scheme is known as the Net Asset Value (NAV). The performance of a mutual fund scheme is measured by the NAV or Net Asset Value.

The NAV per unit of a mutual fund can be calculated by dividing the market value of the mutual fund scheme’s securities by the total number of units in the mutual fund scheme on any given date.

In simple terms, NAV is the price you pay for the mutual fund scheme’s units. In general, mutual fund units start at Rs 10, but it increases once the assets under management of the fund

Mutual funds have NFOs (New Fund Offers) at a set price of Rs 10  You must note, that a lower NAV does not imply a less expensive mutual fund. Total assets minus total liabilities divided by the total number of outstanding units is the NAV formula. The formula for calculating a fund’s NAV is as follows: (Total Assets – Total Liabilities) / Total Number of Outstanding Units = Net Asset Value

How is NAV Relevant to Investors?

NAV just affects how many units are allotted for the amount invested. As an investor, you should be more concerned with how much your investment has grown in value rather than how many units you hold. The value of a scheme’s NAV is more important than the value of the scheme itself. In other words, return should take priority over NAV. Now let’s see How to calculate Nav? what is NAV Formula

How to Calculate NAV?

General NAV Calculation

Let’s say you invest Rs 5,000 in a mutual fund with a net asset value of Rs 500, you would be able to buy 10 units. and suppose You invest Rs 1 lakh in two different Mutual fund schemes A & B, for example. Mutual fund scheme A has a NAV of Rs 10 and mutual fund scheme B has a NAV of Rs 20.

The following units of mutual fund scheme have been assigned to you:

Mutual Fund Scheme A: Rs 1,000,000 divided by Rs 10 = 10,000 units

Mutual Fund Scheme B: Rs 1,00,000 / Rs 20 = 5,000 units

Daily NAV Calculation

Every day, after market hours, all mutual funds calculate the market value of the securities. the mutual fund house subtracts all existing liabilities and expenses to get the net asset value (NAV) of the day.

Net Asset Value = [Assets – (Liabilities + Expenses)]/ The quantity of outstanding units

A mutual fund scheme’s assets are split between securities and liquid cash. Equities, debentures, bonds, commercial paper, and other money market instruments are examples of securities.

All liabilities and expenditures associated with operating the fund are deducted by the fund manager. You can determine the NAV by dividing the total value of cash and securities in a mutual fund’s portfolio minus required liabilities, then dividing by the total number of outstanding units.

[digitaltrand]

MC Insider: Promoter-fund manager nexus, NAV mischief, health scare for market veteran, bank CEO race and more

MC Insider: Promoter-fund manager nexus, NAV mischief, health scare for market veteran, bank CEO race and more

The Rs 38 trillion Indian mutual funds industry is in a sort of a fix. It cannot launch any new fund offers (NFO) till July 1, the deadline that the capital market regulator, Securities and Exchange Board of India (SEBI) has fixed for the industry to put into place an alternative to accepting money through pool accounts; the system prevalent so far. After the last deadline of April 1 was…

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How Mutual Funds Work?

The basic principle of how a mutual fund works is well illustrated here

Investors select and fund, and start their investments.

All funds from various investors are collected is pooled into mutual fund investment.

The fund manager and the team manage this. First, they choose securities and build a portfolio to meet the goal of any fund.

The investment thereby generates returns (performance), which XIRR calculates.

Returns are passed back to the investor. AMC manages the complete process.

Asset Management Companies (AMC) are known as the mutual fund company that introduces a new scheme under NFO (New Fund Offer), as same as IPO (Initial Public Offering) in the stock market. The only difference is IPO is for a particular stock, whereas NFO is for a pool of securities (Stocks, Bonds).

This AMC of Mutual Funds Company picks a Fund Manager with rich experience and a proven track record of performing highly diversified mutual funds. Fund Manager’s team consists of,

Analysts to help in market research and picking the stocks to build a portfolio.

A Fund Accountant to calculate NAV of daily trade.

Compliance Officers.

An attorney to maintain government regulations.

Once the NFO is introduced, it is promoted for investments to increase the AUM (Asset Under Management) for the fund launched. For a particular period, the fund will be under NFO. In this period, an investor can purchase a mutual fund share known as NAV (Net Asset Value) for Rs. 10.

Finally, when the fund is for trade, the NAV increases as the portfolio (stocks, bonds, money market) performers for a day. The NAV is calculated and updated at the end of every trading day, and returns are calculated based on NAV movement.

On average, mutual funds hold 100+ securities, which denotes a highly diversified portfolio investment. Naturally, this lowers the risk of investment, only think you should consider is how to choose a good mutual fund? At the same time, you should have a basic understanding of calculating any fund’s risk ratios.

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What is NFO? Understand the Fundamentals of NFO

I am pretty sure that you must have participated in ‘IPO’ - Initial Public Offering. IPO is the process when Private Limited Company becomes Public Limited by selling their shares on stock exchange for the first time.

Whereas, NFO - New Fund Offer is the launching of ‘New Fund’ / 'Mutual Fund scheme' on a subscription basis by an Asset Management Company (AMC).

How does this work?

The New Fund Offer opens for the subscription for a limited period. The period is pre-defined by AMC. Interested Investors can subscribe to the new scheme at the Offer Price which is usually Rs. 10.

The investors would be able to purchase the units of the fund at a particular price, after the expiry of NFO. Subscribers, usually, have been able to generate considerable returns post-listing.

What are the types of NFO?

There are two types of NFO,

Open-Ended

Once the NFO period expires, this fund is officially launched for all investors. Investors can enter and exit the fund at any time after its launch.

Close-Ended

In a Close-ended fund, entry or exit is not allowed by investors after the end of the NFO period, till maturity. This maturity period can vary, but generally, it's 3-5 years from the date of lunch. Though these funds can be traded on Stock Exchanges even before maturity, their liquidity is on the lower side.

What are the benefits of investing in NFO?

Opportunity for Good Profit:

As there can be notable differences in the NAV (Net Asset Value) and NFO Offer Price, investors have a score of earning good returns in NFO.

Lock-in Period brings discipline:

As specified earlier, NFO can be close-ended. In Close-ended NFO, there is a lock-in period and investors have to remain invested in that fund till maturity. This feature brings discipline to the investment process. The time spent in the market also matters and impacts the generation of returns positively.

Good Flexibility:

In a close-ended NFO, the Fund Manager is assured that the money will not get withdrawn for a certain period. Hence, even if an NFO is launched at Market peak, the Fund Manager can hold the partial investment and wait for the right opportunity.

No threat of large flows of Money:

Open-ended funds witness a large inflow and outflow of money. This can force a Fund Manager to sell the stocks even at market lows. Eventually, Investors can incur losses in this sale. Unlike open-ended funds, investors of close-ended funds lock the money till maturity. A Fund Manager gets time for re-balancing, stock selection, and reviewing the portfolio. Hence, the probability of return is increased.

Checklist before investing in NFO:

Investors should read the Offer Document to understand the Asset Allocation, Risk, Expected Returns, liquidity, fund’s goal, and other things.

Please check the reputation of the Fund House before investing in NFO. Make sure that the Fund House is in existence for a considerable time (for example - 7 years or 10 years).

Analyze the performance of the Fund House, its other existing schemes. Look at how they have performed in market ups and downs.

This is one important parameter every investor should check. Few NFOs might charge exit load if the redemption is made before the maturity of the fund. The exit load affects the overall returns of the investment. If your lock-in period of NFO is more than your investment time, please think twice before investing. The annual fees, expenses ratio of the fund house for managing the money is another crucial parameter. Please check the same.

Investing in NFO can be a risky game. Investors can easily check the past performance, risk factor, asset allocation, in the case of existing Mutual Fund schemes. This study is not possible in NFO, in the absence of performance history. Hence, it would be challenging to predict the fund’s performance.

Conclusion:

Some NFOs come up with a new investment strategy or innovate the old strategy. This helps retail investors diversify the asset allocation, explore new themes, and even International exposure. An example of Theme based NFO is ESG (Environmental, Social and Governance).

If the NFO is unique and innovative, investors can consider it according to their Investment Profile / Risk Profile.

Also read – What is Risk Profiling and Why is it Important?

On the other hand, there is the unavailability of past performance for the new strategy. Investors mostly participate in the market in Bull Market. Valuations of assets are high in the Bull Market, which may impact the returns in case of open-ended NFOs.

Hence, always invest according to your Investment Profile, Financial Goals, and Time Horizon.

Also read – Goal Asset Mapping : Learn to Plan Your Investment Goals the Kitchen Way

A few of the recent live Regular NFOs are as under:

ICICI Prudential Midcap 150 Index Fund - Regular Plan (IDCW) (Equity Mid-Cap)

SBI Fixed Maturity Plan (FMP) - Series 56 (1232 Days) - Regular Plan (G) (Fixed Maturity Plan - Debt)

Mahindra Manulife Balanced Advantage Yojana - Regular Plan - (G) (Dynamic Asset Allocation/ Balanced Advantage)

Kotak Nifty Alpha 50 ETF - Regular Plan (G) (Index Fund/ ETF)

DSP Nifty Midcap 150 Quality 50 ETF - Regular Plan (G) (Index Fund/ ETF)

Motilal Oswal Nasdaq Q50 ETF - Regular Plan - (G) (Index Fund/ ETF)

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Our representatives would be pleased to meet you and provide more details. Write to us or get in touch with us here.