Photo: iStock
Photo: iStock

What’s further fund offer?

  • An FFO is different from a further public offer (FPO) or a follow-on offer, which is a term that applies to stocks rather than mutual funds
  • In an FPO, an already listed company issues shares to the public afresh

A further fund offer (FFO) is a subsequent offering in a mutual fund, typically an exchange-traded fund (ETF), from the issuer. An FFO is different from a further public offer (FPO) or a follow-on offer, which is a term that applies to stocks rather than mutual funds.

An FFO is the issue of a tranche of units in a mutual fund after its launch. In an FPO, an already listed company issues shares to the public afresh. The launch of a mutual fund is called a new fund offer or NFO.

FFOs in India have usually been a feature of government ETFs such as CPSE ETF and Bharat 22 ETF. The government often issues units in FFOs at a discount (3-5%) in order to attract investors. Some investors subscribe to FFOs just to grab the discount and exit immediately after, but that is a risky strategy.

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