Why NFOs by insurance companies should be on NRIs’ investment portfolio

Why NFOs by insurance companies should be on NRIs’ investment portfolio
When it comes to financial planning, investing in India is like second nature for Non-Resident Indians (NRIs). While this affinity towards Indian financial markets is rooted in the cultural connections that NRIs have with India, it is also financially savvy and makes financial and strategic sense to do so. There are multiple reasons for that. One, India’s robust economic growth in the face of global uncertainties offers stability and attractive investment opportunities. As the whole world, especially the West, is dealing with economic turbulence right now, the Indian growth story remains intact and is going strong.

To add to that, there is a robust banking system in the country, coupled with a progressive regulatory environment. And together with a vibrant stock market, they make India a fantastic investment destination for the NRIs.

While it is true that India offers an array of investment choices, there are some that are most preferred among the NRIs. Real estate, fixed deposits, gold, equities and bonds are the preferred choices. But India has a lot more to offer. New Fund Offers (NFOs) are one among such instruments that have been making a lot of waves recently, and must be part of everyone’s portfolio, even more so for the NRIs. Let’s find out why.

What Are NFOs And Why Do They Make Investment Sense?

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NFOs are basically the initial offerings of investment funds. These funds have a specific objective and strategy that they follow to invest in the stock market. The strategies are defined to leverage certain specific advantages that the market scenario offers at the time. It could be an emerging trend, a specific asset class, or a particular investment ideology. The basic idea is that NFOs offer the investor a ground-floor opportunity to invest in that particular strategy right from the beginning and help investors diversify their portfolio.

Returns Generated by Newly-Launched Successful NFOs
It’s important to look at the performance of some recently-launched NFOs to truly demonstrate their potential. For instance, if we look at the Mid Cap Fund launched by ICICI Prudential Life Insurance in September 2022, it gave a return of 54.8% in the last 1 year. Its Mid Cap Hybrid Growth fund launched in September 2023 also has generated a return of 38.3% by January 2024 since inception. Also, the Small Cap Discovery Fund by TATA AIA Life Insurance launched in July 2023 garnered an impressive return of 39.8% as of January 2024 since inception. This effectively demonstrates the success stories of NFOs by insurance companies and the potential they hold for investors.Benefits of Investing In NFOs by Insurance Companies
First and foremost, insurance companies have a long history of expertise in risk assessment and management. So they have some unique advantages when it comes to offering NFOs that provide the right kind of diversification benefits.

Second, the NFOs launched by insurers are part of market-linked products that offer insurance along with an investment component. Hence, they have the added benefit of providing financial security to your family. Another advantage of these funds is that they provide risk-adjusted returns. Insurance companies have a track record when it comes to preserving the investors’ capital while actively seeking the potential for higher returns. By opting for these funds, you get the benefit of their experience in this domain.

Since the insurance sector is a significant part of the country’s economic growth story, insurance companies are quite familiar with the trends that fuel India’s economic trajectory. This awareness of trends, and the ability to pre-empt and predict them, gives them a unique advantage to leverage it to design NFOs that are in line with India’s evolving economic scenario.

With all these advantages, it is a fairly obvious choice to invest in NFOs offered by Indian insurance companies, not only for NRIs but even for ordinary Indians. NRIs can gain exposure to innovative and potentially high-growth sectors, allowing them to stay ahead of market developments. The ground-floor opportunity that NFOs offer aligns with the NRIs’ desire to enter the market in an advantageous position. Moreover, the diversification into one more asset class in the Indian market provides them protection from financial turbulence while also offering the potential for higher returns.

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