When it comes to investing in mutual funds, you often think about think about whether to invest in new funds or invest in the existing ones have been launched further so that you can get the best returns in the future. The biggest difference is NFO. In this, money is raised initially from investors in a new fund.
Meanwhile, the biggest question arises whether to invest the money in a new fund or in an existing fund, regarding which it has been said that everyone’s circumstances are different and everyone’s goals are also different, so you should take your decision carefully.
NEW FUND OFFER (NFO)
Every mont, hnew NFOS are launched in the market by new AMCs, but whether NFOs will give you good money in the long run or not is the biggest question because they do not have any track record, some points related to which have been mentioned.
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Potential for Early Gains
By investing in a new fund, you get to invest Rs 10 initially, which also has a greater chance of accelerating the growth of your investment. New funds can give you strong returns if you invest actively. It depends on the market and the strategies of the fund manager.
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Exciting new strategies
If the fund manager operates the new fund with his skill and experience, then he can run the fund well by making good strategies with the newly raised money and some rulings. In which your returns can be made by studying the NFOs spread in the market and diversifying your portfolio well, it will depend on your fund manager.
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Lack of track record:
The biggest bad thing about the new fund is that there is no record of how much investment will be made in which shares because the investments will be made as the funds are raised. By investing in a new fund without a record, there is a chance of losing your money. Sometimes a fund does not see much rise, whereas many funds grow so fast that your money gives 4 times the return of the bank’s FD . It all depends on the market; as the market increases, the value of your portfolio will also increase.
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Higher Initial Costs:
To raise money for NFO in the initial days, a lot of money has to be spent on AD marketing, which costs a lot. The cost of your investment remains high in the initial days, which will not see much return in the short term. As time goes by and funds are raised, cost expenses will start reducing.
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Uncertain Future
Is there any guarantee in the new fund whether it will give you ,returns, as there is no record as to how their diversification will be, like there is no visible thing that is uncertain for the future
Existing mutual fund
These are those mutual funds that were launched many years ago and in which one can invest well after knowing the experience of the record fund manager.
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Portfolio transparency
Portfolio transparency is available, in which we get a complete track record of how much percentage has been invested in which shares. Who will get to invest in which sector in the coming time, with all transparency, how much AUM is available, through which you will be able to estimate how much money has been invested
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Proven Performance
By investing in an existing fund, there is a record of how much return you have gotten in how many years, and you can guess that it will give good returns if you invest in the future.
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Lower initial costs
There is no need to do any kind of marketing or promotion in the existing fund, which also gives good returns if no expense is included in it.
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Diversification Opportunities
In the old fund, since the manager already has the fund, he is able to buy more in case of a market a market crash and is also able to do the diversification properly because he is skilled and has also given good returns. which you will be able to get a good return of at least 12%.
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Better Liquidity
They already have liquid with ,them, which allows them to manage everything from the aggressiveness of the portfolio to how much they want to keep in debt. According to the trend, we are able to buy and sell due to liquidity.
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Making Your Decision
You can guess from this whether you should invest in a new fund or an old fund.. Everyone has assets and liabilities. You will have to decide for yourself by defining long-term and short-term goals according to your goals. Records show that most of the NFOs have failed to raise funds by 2022, but many of the mutual funds that have been nominated are doing quite well.