Should we invest in the new NFOs of a mutual fund scheme?

New Fund Offer or NFO is a new mutual fund scheme introduced by a fund house, aimed at raising capital to invest in underlying securities. They are the new kids on the block. It's difficult to judge the performance since they don’t have a track record.

Thus, investing in an NFO is a little risky, since you are allocating funds to an instrument whose performance you cannot review for the time being. This does not mean you should shy away from investing in NFOs. Just be aware of the uncertainty and risk you will be taking on.

It’s a bet you’re making on future performance. It could be fruitful or it could prove to be unsatisfactory. You should be ready to face either of the two scenarios. Ensure that you understand the risk before taking a plunge. If you’re uncomfortable with that level of risk and uncertainty, it's best to stick to consistent performers with a good track record. Else wait for the reviews to roll out before taking a call.