Is it accurate to say that NFOs are alluring because they cost Rs. 10 at all times?

This is untrue. The net asset value, or NAV, of a mutual fund simply represents the value of each unit in the fund’s underlying portfolio. When an equity NFO is released while the Nifty is trading at 30 times P/E, the NFO and all current funds will only purchase equities at these prices. It makes no difference what an NFO’s issue value is. Also Invest in NFO Scheme Online.

For instance, when the Nifty is trading at 14 times trailing P/E, purchasing a mutual fund on the secondary market at a NAV of Rs.145 is a wise move. On the other hand, if the Nifty is trading at a trailing P/E of 29, investing in a mutual fund NFO at a NAV of Rs. 10 is a horrible choice. It makes no difference if the fund’s NAV is 10 or 100 rupees. The quality of the underlying portfolio is important.

Is purchasing nfos less expensive than purchasing items from a continuous window

That isn’t always the case, and you might actually pay more in an NFO. A mutual fund must invest significantly in marketing, publicity, and distribution when it releases an NFO. It entails higher costs in the form of advertising, publishing pamphlets, printing of forms and marketing collaterals, road-shows and broker meets across the country etc.

In addition, for seriously distributing these mutual fund NFOs, the majority of brokers and distributors charge upfront commission and trail fees. The upfront expense of an NFO is considerable when all of these factors are considered. Since all of these expenses are deducted from the NAV, the NFO will always list below market value. You can choose from Direct Plans in the case of a continuous window, which are significantly less expensive.

Do an IPO and an NFO share any similarities?

In that both IPOs and NFOs involve crowdsourcing funding, they are comparable. NFOs are also kept open for subscription for a set amount of time, just like IPOs. NFOs typically remain open for 15-20 days, whereas IPOs typically close in 3 days. Similar to IPOs, NFOs have expenses related to marketing, administration, legal, and compliance, among other things.

Second, both an IPO and an NFO frequently occur during times of rapid expansion and strong stock market returns. The NFOs and IPOs are both subject to SEBI regulation, which covers all facets from prospectus filing to real fund allocation oversight.