Be careful before choosing NFOs!

Despite stellar performances of various mutual fund schemes over the years, investor returns have been many times lower than the actual fund returns. This typically happens when fund gather stocks when markets are at a high. When the appetite for a certain theme is high, mutual funds usually launch a new fund offering focused on those themes, catching stocks when they are closer to peaking out. This leads to poor investor returns. However, this has been negated to some extent by investors choosing the SIP route which allows them to consistently buy when stocks are going cheap. So please watch out for New Fund Offerings (NFO) on new themes when markets are at all-time high. It may not give you desired results.