Advantages of NFO
1. Lower Expense Ratios: Some NFOs may offer lower expense ratios compared to similar existing funds, especially during the initial phase. Lower expenses can result in higher net returns for investors over the long term.
2. Potential for Early Growth: Investing in an NFO allows investors to participate in the early growth phase of the fund. As the fund attracts new investors and deploys capital, it may experience growth that could lead to higher returns for early investors.
3. Customized Investment Approach: NFOs may cater to specific investment themes or strategies, allowing investors to align their investments with their individual preferences, risk tolerance, and financial goals.
4. Diversification Benefits: By adding exposure to new asset classes, sectors, or investment styles, NFOs can help investors diversify their investment portfolios. Diversification can potentially reduce overall portfolio risk and enhance long-term returns.
5. Lower Minimum Investments: Some NFOs may offer lower minimum investment requirements compared to existing mutual funds, making them more accessible to a broader range of investors.