Lux Investing
difference between investing in IPO and non IPO for mutual fund?
If i invest 5000 Rs in a new IPO mutual fund , is it better than invetsing Rs 5000 in an established good mutual fund? In a new mutual fund we get 500 units but maybe in an established mutual fund for 5000 Rs we get only 50 units. But does it make any difference for growth fund?
Public Comments
- The only problem with the IPO is that its not market tested and without knowing the contents of the mutual funds its impossible to evaluate. If I was buying any mutual fund I'd look at morningstar for 4 and 5 star funds over the past five years. The IPO might seem attractive but there's no track record. Better yet scrap buying the mutual fund and look at some of the discounted equities. HSY, HES, SUG, ETP, WB, BAC, IBM, ORCL, CVX, CX. Buy energy, tech and select financials. Good luck .
- I can answer this question from a US based perspective. The price of a mutual fund is completely irrelevant. Just as the price as a factor by itself for a stock is irrelevant. New mutual funds are smaller than established mutual funds, so the assets are easier to manage. Good mutual fund managers may be able to produce better results with the new mutual fund due to the size and lack of cash inflows. New mutual funds do come with risks not normally associated with established mutual funds such as having no track record. You do not know how the mutual fund will perform in various market environments. I hope this helps. Michael A. Weiss, CFA The Editor The Mutual Fund Investor http://www.mutualfundinvestor.net
