What are the things to keep in mind while investing in NFO of Mutual Funds?

-Name withheld on request

(Reply to Sanjeev Bajaj, Joint Chairman and Managing Director, Bajaj Capital)

As of now, there are few NFOs, but one should be careful while investing in them. Mutual fund investment is linked to risk appetite, investment horizon, finance goals, etc. Once you have identified all these aspects, there is portfolio creation. One should invest only if an upcoming NFO suits your profile.

To understand NFO, one must keep in mind the asset class that the type of fund belongs to, its category, launching AMC, performance of the fund manager, philosophy of the fund, security selection process, among other factors. It is better to consult a financial advisor before investing in NFOs or mutual funds.

I want to invest Rs 10,000 every month in Systematic Investment Plan (SIP). Can you recommend some mutual funds for investment? Also, how should I go about it?

-Name withheld on request

You should have mentioned the risk appetite and the tenure of the investment.

We are assuming that your risk profile will be aggressive long term over the next 7-10 years. You can split your monthly contribution between equity and hybrid funds. Around Rs 1,500 in Parag Parikh Flexi Cap, Canara Robeco Emerging Equities Fund, Mirae Asset Mid Cap Fund, IDFC Sterling Value Fund, Aditya Birla Sun Life Balanced Advantage Fund, ICICI Prudential Balanced Advantage Fund. The remaining Rs 1,000 can be invested in Kotak Small Cap Fund. This way your portfolio will be diversified across asset classes, categories, schemes and asset management companies. It is also advised to review your portfolio at least once in a year.

(Questions and thoughts at mintmoney@livemint.com)