NFO Full Form in Share Market

What is the Full Form of NFO in The Share Market?

The NFO Full Form in Share Market is New Fund Offer. Actually, this is the term that you often would come up with while discussing mutual funds and ETFs. Simply put, NFO is when a mutual fund or an ETF is offered to the public for the first time.

Types of NFOs

There are mainly three kinds of NFOs, each with its own setup:

  • Open-Ended Funds: These are flexible in nature. Any time post the NFO phase, one can invest or divest his money, meaning you get a lot of liquidity.
  • Closed-Ended Funds: These are a bit more definitive in nature. Investment is only available during the NFO period, and there exists a clear period for your investments. Once the NFO is over, these get listed on stock exchanges, and that’s where you can trade the specific funds.
  • Interval Funds: These are to be considered a mixture of open-ended and closed-ended funds. They allow transactions, though only at times that are pre-established.

How Does an NFO Work?

When a new mutual fund scheme is floated, it is an NFO with which the Asset Management Company (AMC) launches the scheme. That is your window to be able to buy units at a starting price before the fund gets into official trading. After the closing of the NFO, the fund hits the trading floor, and one is allowed to buy or sell units based on the Net Asset Value (NAV) of the unit. The money that comes in from the NFO is put into different assets, all lined up with what the fund aims to achieve.