Is The NFO Euphoria Good For Investors?

The Indian mutual funds industry is riding high on the back of a buoyant equity market. Investors’ bullishness for the equity market is visible through the growing number of mutual fund systematic investment plans (SIPs) and the flurry of new fund offers (NFOs). SIPs recorded a monthly inflow of close to Rs 10,000 crore in August 2021, according to data from the Association of Mutual Funds in India (Amfi), while in September alone, at least three NFOs were launched—Kotak MultiCap Fund, Mirae Asset S&P 500 Top 50 ETF and HDFC Developed World Indexes Fund of Funds. The industry mopped up Rs 60,000 crore through 84 NFOs launched between January and August 2021, according to Amfi. Clearly, more and more investors are buying into NFOs. But does it really make sense to buy into every NFO that comes out in the market? Let’s explore. Is an NAV of Rs 10 a Big Deal? Usually,...