A new fund offer (NFO) is the mutual fund equivalent of an IPO. Just as companies come out with Initial Public Offers (IPO) to raise fresh funds for the company, similarly mutual fund AMCs come out with NFOs to raise funds under a new scheme or plan. Like IPOs, a mutual fund NFO is also open for subscription for a fixed period (around 15 days) after which the subscription is closed. However, NFO is not meant for a company to raise fresh funds and there is no question of valuation of NFO, unlike IPOs. NFOs are just money collection at a level and then the funds are allocated to assets in the market.

NFO is the entry point for both closed-ended funds and open-ended funds can raise funds through an NFO. A closed-ended fund will close for subscription after the initial subscription period and will be closed till the scheme matures. If somebody wants to exit the fund mid-way, they have the option of selling in the market as closed-ended funds are listed in the stock market. In case of open-ended funds, once the NFO subscription closes and the funds are invested, then the fund remains open round the year for fresh subscriptions and for redemptions.