Difference between NFO and IPO


However similar they may seem to be an IPO and NFO, it is important to note than an Initial Public Offering is quite different from a New Fund Offer. An IPO is the sale of a company’s shares prior to its listing on the stock market, whereas an NFO is an offer of a mutual fund scheme’s units.

An IPO may be priced above or below the stock’s real value, as dictated by the fundamentals, which in the case of an NFO cannot be interpreted. The pricing of a mutual fund is simply dictated by the market value of the units it holds, which is also known as the Net Asset Value or NAV. This is true during the valid time period of NFO and even after the fund is launched. So, while investing, you do not have to worry about IPO-like huge price fluctuations and getting allotment in an NFO.

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