Mutual Fund New Fund Offerings (NFO) open this week

While the NFO or new fund offerings of mutual funds are conceptually different from IPOs, the logic is approximately the same. NFOs are when the fund house comes out with a new offering for a fixed period of time at a fixed price. Once the NFO is closed, the open ended funds would start offering buy and sell at continuous NAV based price of the fund while the closed ended funds would list on the stock exchanges.

NFOs open for subscription in the current week

Currently, in this week, there are a total of 8 NFOs that are open for subscription. Out of these 8 NFOs, 1 is from Baroda BNP AMC, 3 from HDFC Mutual Fund, 1 from ICICI Prudential Mutual Fund, 1 from NJ Mutual Fund and 2 from UTI Mutual Fund. Out of these 8 funds 5 are passive funds while the other 3 are active funds. Here is a quick take on the 8 mutual fund NFOs that are open for subscription this week.

1. Baroda BNP Paribas Floater Fund

This is an open ended debt fund that will predominantly invest in floating rate instruments. The NFO calls for a minimum subscription of Rs. 5,000 per application.

The NFO has already opened on 10th April 2023 and will remain open till 24th April 2023.

The primary objective of Baroda BNP Paribas Floater Fund is to generate regular and steady income through investment in a portfolio comprising predominantly of floating rate instruments. These are instruments where the yield fluctuates with changes in interest rates. It will also look at fixed rate instruments swapped for floating rate returns. There is no guarantee of returns or of risk and it is subject to market risk, inflation risk, reinvestment risk and even some extent of default risk.

2. HDFC Nifty Mid-Cap 150 Index Fund

This is an open ended index fund that will mirror the performance of the underlying index; in this case the Nifty Midcap 150 index. The NFO calls for a minimum subscription of Rs100 per application.

The NFO has already opened on 06th April 2023 and will remain open till 18th April 2023.

The investment objective of the Scheme is to generate returns that are commensurate (before fees and expenses) with the performance of the NIFTY Midcap 150 Index TRI. The TRI is the total returns index, which includes dividends too. Index funds purely mirror the underlying index and fund managers endeavour to reduce the tracking error. There is no guarantee of returns, despite being a passive fund.

3. HDFC Nifty Small-Cap 250 Index Fund

This is an open ended index fund that will mirror the performance of the underlying index; in this case the Nifty Smallcap 250 index. The NFO calls for a minimum subscription of Rs. 100 per application.

The NFO has already opened on 06th April 2023 and will remain open till 18th April 2023.

The investment objective of the Scheme is to generate returns that are commensurate (before fees and expenses) with the performance of the NIFTY Smallcap 250 Index TRI. The TRI is the total returns index, which includes dividends too. Index funds purely mirror the underlying index and fund managers endeavour to reduce the tracking error. Returns are not guaranteed.

4. HDFC S&P BSE 500 Index Fund

This is an open ended index fund that will mirror the performance of the underlying index; in this case the broad-based S&P BSE 500 index. The NFO calls for a minimum subscription of Rs100 per application.

The NFO has already opened on 06th April 2023 and will remain open till 18th April 2023.

The investment objective of the Scheme is to generate returns that are commensurate (before fees and expenses) with the performance of the S&P BSE 500 TRI. The TRI is the total returns index, which includes dividends too. Index funds purely mirror the underlying index and fund managers reduce the tracking error. Returns are not guaranteed.

5. ICICI Prudential Innovation Fund

This is an open ended equity Sectoral / Thematic fund that will actively invest in a portfolio of stocks that represent the underlying theme of innovation. The NFO calls for a minimum subscription of Rs. 5,000 per application.

The NFO has already opened on 10th April 2023 and will remain open till 24th April 2023.

ICICI Prudential Innovation Fund is an open ended equity thematic fund. The objective of the Scheme is to generate long term capital appreciation by predominantly investing in equity and equity related securities of companies that can benefit from innovation strategies and themes. It can also invest in such mutual fund units. Being an active fund, costs would be higher, but there is the scope for alpha.

6. NJ ELSS Tax Saver Scheme

This is an open ended equity fund that will actively invest in a portfolio of stocks to create a diversified portfolio. The NFO calls for a minimum subscription of Rs. 500 per application.

The NFO has already opened on 13th March 2023 and will remain open till 09th June 2023.

The investment objective of the Scheme is to generate income and long-term capital appreciation from a diversified portfolio of equity and equity-related instruments. Investments in the ELSS fund are eligible for tax exemption under Section 80C of the Income Tax Act, subject to a lock-in period of 3 years.

7. UTI Silver ETF Funds of Funds (FOF)

This is an open ended fund of funds (FOF) plan to provide returns in sync with the price of silver. The NFO calls for a minimum subscription of Rs. 5,000 per application.

The NFO has already opened on 10th April 2023 and will remain open till 19th April 2023.

The objective of the fund is to provide returns that correspond to returns provided by UTI Silver ETF by investing in units of UTI Silver ETF. This will be a sort of feeder fund into UTI Silver ETF. However, there is no guarantee or assurance as the returns are contingent on the price movement of silver.

8. UTI Silver Exchange Traded Fund (ETF)

This is an open ended ETF where the returns will be pegged to the returns on silver. The NFO calls for a minimum subscription of Rs. 5,000 per application.

The NFO has already opened on 10th April 2023 and will remain open till 13th April 2023.

The Investment Objective of the Scheme is to generate returns that are in line with the performance of physical silver in domestic rupee prices. This is subject to tracking error and returns are not guaranteed, as it is a play on silver prices.