As New Fund Offers (NFOs) continue to flood the Indian mutual fund industry in 2026, investors are increasingly faced with a familiar dilemma—should they invest in a newly launched scheme or stick with old mutual funds that already have proven track records. According to reports from TopNews, financial experts suggest this decision is often driven more by psychology than performance logic, and in many cases, investors may be making costly mistakes by chasing new fund launches. The real comparison, experts emphasize, should be between track record vs no track record—proven performance across market cycles versus marketing-driven demand spikes.
Financial planners emphasise that several equity mutual funds in India have delivered consistent performance over 20–30 years, often generating mid-to-high double-digit CAGR returns over long cycles. As reported by TopNews, Kalpesh Aashar, Founder of Full Circle Financial Planners, noted that longevity in mutual funds is often misunderstood, stating 'Old is gold… but not in everything'. He pointed out that many long-standing funds have historically delivered 12 per cent to 17 per cent CAGR, which becomes significantly powerful when compounded over 20–30 years. According to Aashar, higher NAVs simply reflect maturity and performance—not expensiveness or disadvantage. He added that 'Rs 100 NAV was also Rs 10 once', highlighting that core principles like diversification and long-term investing have remained unchanged for decades.
Despite the availability of established funds, NFOs continue to attract strong inflows due to behavioural psychology, as reported by TopNews. Nitesh Buddhadev, Founder of Nimit Consultancy, explained that investors are naturally drawn to novelty, stating 'The biggest myth is the ₹10 NAV attraction'. He explained that whether an investor enters at ₹10 NAV or ₹100 NAV, returns remain identical if the percentage growth is the same. The only difference is the number of units allotted—not the wealth created. Buddhadev warned that this behaviour often leads to frequent switching and portfolio instability. He added that 'Some newness bias drives investors—like trying new things in shopping or food. In investing too, people think a new fund might perform better'. This behaviour, he cautioned, often leads to portfolio overcrowding where investors end up holding too many overlapping schemes.
Asset Management Companies (AMCs) continue launching NFOs aggressively, with over 1,100 NFOs launched since 2020, raising approximately ₹4.67 lakh crore, according to TopNews. Buddhadev explained that AMCs are product manufacturers whose job is to create offerings, while investors must decide what is suitable. He pointed out that the mutual fund industry in India has expanded significantly, with over 50 AMCs operating today, compared to just a handful in earlier decades. This scale of new product launches shows the aggressive expansion strategy of AMCs, but not necessarily the need for them in every portfolio. Experts clarify that AMCs launch NFOs not because existing products are insufficient, but because product expansion is part of their business model.
Experts outlined specific situations where investing in an NFO may be justified, as reported by TopNews. Kalpesh Aashar explained that a well-constructed portfolio typically needs only 6–8 schemes, covering key categories such as large-cap exposure, flexi-cap funds, multi-cap funds, mid-cap funds, and small-cap funds. He stressed that diversification across market caps is more important than constantly adding new schemes. Experts clarified that NFOs are not universally bad—their usefulness depends entirely on portfolio gaps and specific thematic or sectoral strategies. However, financial planners warn that excessive participation in NFOs often leads to portfolio overcrowding and reduced efficiency. Buddhadev summarized bluntly that 'Around 99 out of 100 NFOs are not needed for most investors'. Instead of chasing new launches, investors are better served by reviewing existing holdings, understanding long-term performance, and aligning investments with financial goals.
