What is the difference between a New Fund Offer and an Initial Public offer?
Melodi asks:
In the world of Mutual funds, what is the difference between the two?
Which is safer?
Which one starts at Rs. 10?
In the world of Mutual funds, what is the difference between the two?
Which is safer?
Which one starts at Rs. 10?
Related questions:
- A book on “How to come out/raise an Initial Public Offer by an Indian company”? Delicia asks: An un-listed company would like to raise its equity through public offer and get listed on Stock exchanges...
- 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...
- "now That I Got That Hedge Fund (or Fund of Fund): What is it Worth?" Webinar Examines the Monetization of Hedge Fund Management Firms Chantay asks: Opalesque, the world's largest subscription-based publisher on alternative investments, hosts a Webinar: The Monetization of Hedge Fund Management...
- What is the difference between Follow on Public Offer and Secondary Market? Cordelia asks: when a compnay goes to public for first time is called IPO. After it's shares traded in secondary...
- why is it safe to invest in initial public offerings? Valencia asks: hello all,am doing job wid reliance money,so i want to clear my doubts abt share markets,ipo's n new...
Initial public offering (IPO), also referred to simply as a “public offering,” is the first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded.
In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market.
Also referred to as a “public offering”.
IPOs can be a risky investment. For the individual investor, it is tough to predict what the stock will do on its initial day of trading and in the near future because there is often little historical data with which to analyze the company. Also, most IPOs are of companies going through a transitory growth period, which are subject to additional uncertainty regarding their future values.
New Fund Offer (NFO)
A security offering in which investors may purchase units of a closed-end mutual fund. A new fund offer occurs when a mutual fund is launched, allowing the firm to raise capital for purchasing securities.
A new fund offer is similar to an initial public offering. Both represent attempts to raise capital to further operations. New fund offers are often accompanied by aggressive marketing campaigns, created to entice investors to purchase units in the fund. However, unlike an initial public offering (IPO), the price paid for shares or units is often close to a fair value. This is because the net asset value of the mutual fund typically prevails. Because the future is less certain for companies engaging in an IPO, investors have a better chance to purchase undervalued shares.
both may start with Rs.10.. but in IPO there is always premium which is added with the face value(generally Rs.10). so u will get NFO at Rs.10 in reality nowdays… extremely rare to get an IPO at Rs.10
NFO is for new mutual funds
IPO is for shares of one company.
Mutual fund is good till one have good knowlege of IPO process and understanding of perticular industry.