When a relationship manager or an “agent” calls during work hours, pitching a “new mutual fund” and promising higher returns for early investors, many professionals instinctively assume it’s just another investment opportunity. But what’s often being sold in such calls is not a regular mutual fund: it’s a New Fund Offer (NFO), a product that merits a closer look.

Shivani Gera, a strategic finance consultant and creator of the personal finance program Decoding Money 2.0, warns that such NFO pitches are specifically designed to exploit urgency and emotion, often leaving investors with an unproven and unsuitable product.

What Exactly is an NFO?

An NFO is the first-time subscription offer for a new mutual fund scheme, usually priced at ₹10 per unit during the launch period. After the subscription window closes, the fund units begin trading at their net asset value (NAV), which fluctuates based on the market value of the underlying securities.

Though a valid product governed by SEBI (Securities and Exchange Board of India), NFOs do involve risk that is glossed over in marketing presentations. NFOs lack a track record since they are new funds, so it’s hard to know how they will perform throughout market cycles.

The Sales Playbook

Speaking to Business Desk, Shivani Gera explains that many professionals fall prey to the psychology behind these pitches. “The urgency and novelty are by design,” she says. “Agents often emphasize phrases like ‘NAV abhi ₹10 hai, baad mein badega’ (The NAV is ₹10 now, it will rise later) or claim that maximum returns are made in new funds, which is misleading.”

Typically, sales agents are incentivized by higher commissions on NFOs compared to existing funds. That’s one reason they tend to aggressively promote them despite no evidence that new funds outperform their peers.

The Hidden Truths

Here’s what prospective investors should know before buying into an NFO:

• No Performance History: Unlike existing funds, you can’t evaluate past returns or volatility.
• Not Necessarily Superior: There is no assurance that a new fund will perform better than older, well-managed funds.
• Increased Costs and Charges: NFOs may have larger distribution commissions, which are not necessarily in the investor’s best interest.
• Doubtful Strategy: New funds have not been tested through various market conditions, and their strategy and durability are unknown.

Gera advises asking pointed questions:

“Would you invest your bonus or savings based on hype? Are you buying because it’s new, or because it’s strong? Is the urgency real, or just sales psychology?”

Proven vs. New: Where Should You Put Your Money?

For most professionals, consistency trumps novelty. “You don’t need what’s new,” Gera stresses. “You need what’s consistent, reliable, and proven. NFOs are not always bad, but they should never be the first thing someone with hard-earned money puts their trust in.”

Old funds provide transparency, quantifiable performance statistics, and comparability with benchmarks, essential features lacking in an NFO.

Learning to Invest Strategically

Gera, whose five-week mentorship program, Decoding Money 2.0, is attended by professionals, says that the actual issue is not with NFOs alone, but with financial illiteracy among professionals. “It happens not because people don’t care about their money, but because they were never taught how to handle it strategically,” she adds.

Her program focuses on helping individuals understand their salaries, savings, investments, and the psychological traps of financial products, including how to avoid urgency-based decisions.

To Conclude

NFOs are not inherently bad, they can suit certain niche strategies or fill gaps in a portfolio. But they are not designed to replace tried-and-tested funds, nor should they be bought solely based on persuasive phone calls or fear of missing out.

Before investing, professionals should:

• Compare the NFO’s stated investment objective with existing funds.
• Evaluate whether the fund fills a specific gap in their portfolio.
• Assess the credibility and experience of the fund manager.
• Be wary of claims that the low initial NAV of ₹10 automatically implies a bargain, it doesn’t.

As the financial industry continues to innovate, investors must remember: new doesn’t always mean better. Due diligence and strategic thinking remain indispensable in wealth creation.

For those looking to build a robust understanding of personal finance and avoid such pitfalls, Gera’s mentorship program is one among several options now available to professionals who want to turn their salaries into strategies, not just incomes.

Also Read: Lessons on Money Management from a Jobless but Wealth-Secure Man