JioBlackRock Asset Management Private Limited, a 50:50 joint venture of Jio Financial Services Ltd (JFSL) and US-based BlackRock, has announced the launch of five index funds as its first offering on Tuesday, August 5. A statement issued by the company said that the new fund offering (NFO) will end on August 12, 2025. The offering includes Nifty 50 Index Fund, Nifty Next 50 Index Fund and Nifty 8-13 Year G-Sec Index Fund.
According to the company, this initiative is a significant step towards providing diversification, transparency and digitally advanced investment solutions to Indian investors. These funds are suitable for both first-time investors and experienced investors who want to build a balanced portfolio.
Earlier, the fund house had raised Rs 17,800 crore through its three cash or debt mutual fund schemes – JioBlackRock Overnight Fund, JioBlackRock Liquid Fund and JioBlackRock Money Market Fund.
What Is a New Fund Offer?
New Fund Offer or NFO is a term used when any mutual fund brings a new scheme in the market to raise funds from common people. The company tries to earn profit by investing the funds collected through NFO in share market, government bonds and other instruments. The company also spends some of the money on its administrative work.
NFO is like an initial public offering or IPO to a great extent because the work of both is to collect funds from the market. The NFO is open for a limited period during which investors can buy units of the fund at a fixed offer price of Rs 10, after NFO period, investment in that fund is possible only on its real-time Net Asset Value (NAV).
Type Of NFOs
There are three types of NFOs:
Open-Ended NFO: Equity Funds, Debt Funds, Hybrid Funds are the Open-ended NFOs in which investors can buy or sell units anytime once the NFO closes. Net Asset Value changes daily based on the market.
Close-Ended NFO: Fixed Maturity Plans (FMPs), Infrastructure Funds are the examples of close-ended funds where investors can invest during NFO period only. The fund is locked for a specific time period and it can get redeemed after funds get matured.
Exchange-Traded Funds (ETFs) NFO: Nifty 50 ETF and Gold ETFs are examples of ETFs. These funds function like open-ended funds but trade on stock exchange.
How NFO Works?
Launch and Announcement: When a mutual fund company has to launch a new scheme, it brings a New Fund Offer (NFO) to raise initial money. Along with this, a document (brochure) is also issued, which contains complete information about the scheme – such as, where the money of the fund will be invested, what is its goal and what are the risks involved.
Time Period: The NFO is open for a limited period, after NFO period, investment in that fund is possible only on its real-time Net Asset Value (NAV).
Fund Closure and Investment Begins: On completion of the NFO period, the fund house invests the collected money in stocks, bonds, among other things, as per the scheme’s goal. After this:
Open-ended funds: These funds are again open for general trading. Investors can buy or sell units anytime even after the NFO.
Close-ended funds: The units of these funds are locked-in for a fixed period and their buying and selling is possible only through the stock exchange.
Benefits Of Investing In NFOs
According to Bajaj Finserv, like any new mutual fund scheme, the biggest attraction of investing in New Fund Offer (NFO) is that you can start investing at a low cost and benefit from good returns in the future. Some of its other benefits are given below:
Affordable initial investment
The units in NFO are usually priced at Rs 10, which is called the face value. This means that you can buy more units even by investing less money. For example, an investment of Rs 10,000 can get you 1000 units. This is a great opportunity for those who want to enter the world of investing with a small amount.
Managed by experts
NFOs are managed by professional fund managers, who take all the investment decisions. This gives investors the assurance that their money is in safe hands and is being managed well, which increases the chances of good returns.
Portfolio innovation and diversification
NFOs give you an opportunity to invest in new and different investment strategies. If your existing investments are not performing as expected, NFOs can help you diversify your portfolio and open up new avenues of income.
Future growth potential
Under the supervision of a good fund manager, NFOs can grow over time and help you reach your financial goals. Also, if you expect a future boom in a particular sector (such as technology or healthcare), you can take advantage of this opportunity by investing in an NFO based on that sector.