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NFOs - Options or Confusion

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@codingdefined
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We are seeing a lot of new mutual funds getting offered, as NFO (New Fund Offer). This gives a lot of options for investors as well as at the same time it adds a lot of confusion on the investor's mind. Whenever a new NFO is being offered, the first question that comes to investors mind is they should be getting into the NFOs and start investing on it, if yes which one and will it add any value to its existing portfolio. Because of whole point of investment is to get what best for your portfolio.

PC: Pixabay.com

There are more than 10 NFOs have already launched in the last week or so and more than 100 NFOs are launched in 2021 which is actually good for investors because they get so many options to choose from. But the problem with the NFO is that they do not come with a track record, there is no way to know which one is having a good run in the past and also which one can beat the market.

I really liked some of the innovative funds like the international fund of top countries, electric vehicle fund, blockchain-related fund etc. This actually is good in some sense to have pure diversification. I will definitely go to go for Electric Vehicle (Navi Electric Vehicles and Driving Technology Fund of Fund, Mirae Asset Electric Autonomous Vehicle ETF Fund of Fund and Nippon India S&P EV Index Fund) and Blockchain Related Fund (Invesco CoinShares Global Blockchain ETF Fund of Fund (FoF)) if the fund does not overlap with my existing portfolio.

Though I will definitely invest in it, I will wait for another 6 months or so before jumping onto it to see how it behaves and the clarity related to the fund. I think getting a blockchain fund should be my first priority so that I can have a bridge between the Indian Equity and Crypto which if goes well can be a very good thing to bet on.

Now the confusion part, with these many NFOs we investors are actually quite confused about the diversification and what to include and what not to include in our portfolio. But still having 5-7 funds is more than enough in our portfolio and thus we should be careful that those 5-7 funds should not overlap with the existing fund so that we will have good diversification.