What is NFO in Zerodha? How to invest in it?

Short Answer

NFO in Zerodha is the abbreviation of "New Fund Offer". It refers to the introductory offer of a scheme by an AMC (Asset management company). An NFO is raised when a fund is launched and this will help the firm to raise capital for purchasing securities. 

Detailed Answer

Now, you know the meaning of NFO, let's discuss in detail about this concept of New Fund Offering.

Types of NFO or New Fund Offers:

Basically, there are two types of NFOs depending on the structure of the scheme:

1. Open-Ended

This fund gets officially launched after the NFO period expires. Investors can enter and exit the funds at any time after the launch. 

2. Close-Ended

In this fund, investors are not allowed to enter and exit after the NFO period, until its maturity and typically this period is for 3-4 years from the launch date.

NFO in Zerodha:

Zerodha investors have the opportunity during a New Fund Offer to purchase units of the scheme at their face value, which is ₹10 per unit. Only within a limited period investors can subscribe to an NFO, say fifteen day or a month. Thus, new fund offers are functional on a first come first serve basis. Once the NFO period expires, interested investors shall be able to take exposure only at the prevailing NAV. 

Since New Fund Offer is restricted to a confined time frame, units are allotted to the investors in the order of their application. 

How do you invest in NFO with Zerodha?

Following are the steps to invest in NFO with Zerodha:

1.Investment in New Fund Offer will be not available on Coin app. For place order you have to visit this webpage coin.zerodha.com in your mobile browser. 

2.After login, hover the cursor on your client ID which is right side on the top, you will find multiple options. You can click on NFO (New Fund Offer).

3.You will be able to see the open order window for NFO.

4.You can fill in the ‘Amount to Invest’ section to place the order.  

NFO in Zerodha: Key Points to Note

1.The minimum purchase of an NFO is decided by the AMC only. 

2.After placing the order, Zerodha allows you to modify the amount from the order window on the NFO page. 

3.If you wish to start SIP while applying for an NFO, you can't do so. But, when the units are allotted to you and after the scheme is open for further redemption and purchase then only you can initiate a SIP.

Where can you track the status of NFO order?

You can track the status of your order on the NFO page, status will not shown under the order history on mobile app or Zerodha Coin web until allotment. Normally, NFO period is open for 15 days only, however it is upon the discretion of the fund house. You will also receive the confirmation email regarding the allotment. 

When Will the funds be deducted for your order?

Throughout the NFO period they collect the orders and upload all the orders on the final day of the NFO period. However, you have to maintain sufficient funds in your registered account as of the last day of the NFO.

When can you buy the units if you miss applying for the NFO?

Similar to other funds buying and selling the units gets easy when the funds are opened for continuous purchase. Normally, funds are made available for continuous purchase within 7 days of the NFO closing. 

Zerodha India's largest online stock broking company has upgraded its technological infrastructure. It always offers the right products to the audience in different segments and NFO is one of them. What do you think about it? Managing a massive client base isn't that easy, but Zerodha is definitely doing it well.

Tagged With: Zerodha ReviewZerodhaNFO in ZerodhaZerodha NFONFONew Fund Offer
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Discussion (1)

    NFO in Zerodha means ‘New Fund Offer’. An NFO is the first time when a fund is offered for subscription by an AMC (Asset management company). If you wish to place an order you have to visit on this webpage coin.zerodha.com in your mobile browser.

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