So, which is the better option for you? Well, let's say that much does depend upon personal conditions and aims. Let us look at some advantages of NFOs and Existing Funds that can help you choose the best option for you.
NFO Vs Existing Fund
The advantages of investing in NFOs are:
> Diversification Benefits
Quite often, NFOs introduce new strategies or new types of funds that were not available earlier. This would bring diversification to your investments.
> Access to Emerging Trends
NFOs often ride new emerging market trends. If one gets the opportunity to invest in a sector or theme before it reaches its full potential, better return can be expected.
> Less-Expensive Point of Entry
Most of the NFOs have a very low entry price of INR 10 per unit, which enables all to own it, and one gets more units against a small investment.
Whereas, the advantages of investing in Existing Funds are:
> Proven Performance Record
Established funds have track records of returns and volatility that give you better insight into their performance under the conditions of various market cycles.
> An Established and Diversified Portfolio
This gives them a pre-diversified portfolio, hence cutting down the initial risks from fluctuations in the market or decisions by fund managers.
> Availability of Various Options
There the investor has at hand a choice of funds that can be selected based on the performance of money, risk-adjusted returns, and expertise of the fund manager.
It is to be noted that NFOs depend on market timing and strategy, offering opportunities but with higher risks. Existing Funds benefit from established strategies and diversification but may face performance plateaus in saturated markets.
Lastly, the choice between NFOs and existing funds depends on your investment goals, risk tolerance, and market outlook. If you are an adventurous investor willing to take a risk on new themes and strategies, NFOs might be appealing. However, if you prefer stability, transparency, and a proven track record, existing funds are likely a better choice.
Disclaimer
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
