Should you invest in an NFO?

I keep seeing ads for new fund offers (NFOs). Should I invest in them or stick to existing mutual funds with a track record? - Anonymous

It's natural to be drawn to something new, especially when it's marketed as the next big thing. But in the world of investing, "new" doesn't automatically mean "better".

Most NFOs don't bring anything new to the table. In many cases, they replicate strategies already available through well-managed existing mutual funds. And unlike established funds, NFOs have no track record and no way to assess how the fund manager navigates market cycles, manages risk or delivers on the fund's stated strategy.

Choosing a fund just because it's new is like choosing a cricketer for your team before they've ever played a match, especially when you have seasoned players with a proven track record to pick from.

So unless an NFO offers something truly different, like a new asset class or strategy not already available, there's little reason to choose it over an existing fund with a history of consistent performance.

When it comes to building wealth, it's not about what's trending. It's about what works. And what works is discipline, time and sticking with funds that have already proven themselves.

Want a deeper dive? Read Ask these three questions before investing in an NFO

This article was originally published on April 07, 2025.