IPO vs NFO: How to decide which is a better investment
option for you
Investors
are always seeking the best avenues to grow their wealth. Two popular
investment options in focus are initial public offerings (IPOs) and new fund
offers (NFOs). The two cater to different investment strategies and risk appetites.
An IPO
allows a firm to become listed by making shares of a stock available to the
public.
Conversely,
an asset management company (AMC) may introduce a new scheme called a New Fund
Offering to raise money from the public for the purpose of investing in
financial instruments like stocks and bonds.
Investors
can buy mutual fund units during the short NFO period for a set offer price of
Rs 10. After the NFO period ends, the units can be purchased at the PREVAILING Net
Asset Value (NAV) of the fund.
Key
differences between IPOs and NFOs :
IPO
Aimed at
raising capital for a company, allowing it to expand operations or provide
liquidity for existing shareholders.
NFO
Designed to
raise capital for a mutual fund scheme, enabling professional management of a
diversified portfolio.
Investors
purchase units of a mutual fund, spreading their risk across a range of assets
managed by professionals.
Accessible
without a demat account, making it easier for novice investors to participate.
For More Details: Pooja Manoj Gupta, visit www.giia26.com
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