Is investing in them still a wise choice?

2024 will see fewer new fund offers (NFOs) than 2023, said Mukesh Kochar, National Head of Wealth, AUM Capital, while adding caution that it is difficult to predict the number in advance.

“Although continuous launches by new asset management companies (AMCs) will be on the cards, we will see a lesser number of NFOs from large AMCs. Securities Exchange Board of India (SEBI) has categorised schemes and one AMC can not launch multiple schemes of the same nature,” he told CNBC-TV18.com in an exclusive interaction.

NFOs in 2023

These NFOs were both in debt and equity with the majority being open-ended funds. Until March, target maturity funds were in flavour.

“Those fund houses that were missing in any category have come with NFO to fill that category to take advantage of the vibrant market both in debt and equity. Apart from this many new fund houses have been given licenses like Bajaj, Helios, etc. These new AMCs have to launch their category of funds to start with,” Kochar said.

Notably, Helios Mutual Fund and Zerodha Fund House launched some of their NFOs in 2023, too.

A look at returns

Here are the NFOs that garnered the maximum inflows in the inception month:

(Source: Morningstar India)

Throughout 2023, the Indian stock market surged impressively, witnessing a pronounced bull run that propelled key indices like Sensex and Nifty to soar by nearly 20%.

This upsurge instilled a strong sense of confidence among investors, emboldening them to venture into investment channels like NFOs.

Should one invest in NFOs?

Kochar advises prudence in approaching NFO investments.

He advocates for a post-NFO investment strategy, emphasising the importance of a well-constructed portfolio and established track records.

“We always believe in investment post-NFOs rather than during NFOs. The myth of par NAV is still there with investors. Nevertheless, if investors are getting any new theme or differentiated offering in NFOs which is worth considering then it makes sense to invest. So one has to understand the theme, the portfolio construction strategy, and the team bedding the same before taking any investment call,” he told CNBC-TV18.com.