Should I invest in one of these funds or the NFOs that are recommended regularly?
Anand Kumar, Patna
In most situations, a fund with a track record is better than a completely new one. This is because investing in an MF is about participating in the market at the current levels and, therefore, the Rs 10 pricing of a NFO does not mean any bargain. The rate of return will be the same, whether from Rs 100 or Rs 10 depending on the market. Also, the management style and track record of performance is available to the investor to make his decision regarding an existing fund. An NFO is bought for its theme and promise and should be chosen only if it brings an idea or focus that is currently not available in existing funds. Industry practice is that intermediaries get paid a higher commission for NFOs than for existing funds. That is another reason why NFOs get pushed more aggressively and investors need to exercise caution.
