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Wait and watch: Why you should avoid investing in ETF NFOs

Wait and watch: Why you should avoid investing in ETF NFOs
Wait and watch: Why you should avoid investing in ETF NFOs
The NFO investors don’t get the end of the day NAV, something available to open-ended index fund investors.

Synopsis

A number of issues can dog investors. Since there are several illiquid ETFs on the Indian exchanges, it's better to avoid all ETF NFOs for the moment and get in later, that too after making sure that there is enough liquidity.

Most experts ask you to avoid new fund offers (NFO) because a new scheme does not have any performance track record to go by. Though the asset management companies (AMCs) do provide some idea about the prospective portfolio, common investors remain largely clueless.Some might argue that these problems are not found in index funds and exchange traded funds (EFTs) and therefore, one can participate in their NFOs. ETFs are index funds listed in
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