How To Weather The NFO Storm

Fund houses are launching new fund offers (NFOs) one after another with narrower mandates, which may be risky for you. Should you venture in these and under what circumstances?

- Kundan Kishore

Post-Covid, fund houses have been on a new fund offer (NFO) launch spree in the name of innovation. Sample this: between 2021 and 2024, around 750 NFOs were launched. In 2024 alone, the mutual fund (MF) industry made history by launching 248 NFOs in a single year, the highest ever in its history, according to data from the Association of Mutual Funds in India (Amfi).

A quick back-of-the-envelope calculation shows that this amounts to more than one NFO every working day in 2024. Let’s break it down: There were 366 days in 2024, a leap year, which included 104 non-working days (Saturdays and Sundays) and 16 market holidays. This left 246 working days, and saw 248 NFO launches within those says.

In 2025, the pace is only slightly slower—33 NFOs have been launched till February 20—but we are only in the second month of the year so far. Many others are either in the approval stage or are about to be launched.

Interestingly, the markets reached a new high in 2024, along with the record number of NFOs. Historically, when markets start moving up, more and more NFOs come in. Barring the recent correction, the stock market has been continuously rising for the last four years, with some volatility in the interim.

Investors usually run towards the markets when they are at higher levels. The NFO launch spree essentially caters to that rising demand, and data proves that. The NFO subscription amount went up to `1.27 lakh crore over a oneyear period.

WAVE OF PASSIVE, THEMATIC, SECTORAL FUNDS