Difference: Buyng MFs at IPO time Vs. later?
Daniella asks:
Could someone please tell me what is the advantage of buying a mutual Fund during the IPO time (or New Fund Offer time) Vs. buying it after the MF is released into the market?
Could someone please tell me what is the advantage of buying a mutual Fund during the IPO time (or New Fund Offer time) Vs. buying it after the MF is released into the market?
One difference I have seen is that - at IPO time most of the MF do not charge Entry Load, Anything else?
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Technically, there is no difference. A fund is a fund. 30 years old or 1 day old.
The real difference is that you trade the track record of an established fund for the chance that you’ll get an early and quick pop from a new fund.
That’s the appeal of a new fund. You have a new fund that’s coming out at $10 and you’re hoping that it’s “new car smell” and fresh cash infusion will produce some short term gains for you.
A fund that has been able to demonstrate a history of consistent peformance over a period of years and in good markets and bad markets will probably prove to be a better long term investment.