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A ₹10 mutual fund looks cheap. It isn’t. Why NAV can fool investors
Mint 1 hr ago·6 Sept 2026, 6:27 am
A mutual fund's Net Asset Value (NAV) is simply the price of one unit of the fund. It is easy to assume that a fund with a lower NAV, such as ₹10, is a better bargain than one priced at ₹50. However, NAV is a historical figure that does not indicate future performance. A ₹10 fund could have lost money recently, while a ₹50 fund might have delivered consistent returns over time. The actual cost to buy a fund is its expense ratio, not its price per unit.
This misconception often misleads first-time investors into chasing low-priced funds. The price per unit is irrelevant to the returns you earn. What truly matters is the fund's historical performance and the quality of its investments. Investors should focus on the fund's track record and strategy rather than getting distracted by the unit price. Understanding this prevents you from making decisions based on an illusion.
Moving forward, investors should look past the headline price. Instead, scrutinize the fund's portfolio, expense ratio, and past returns. A low NAV does not guarantee a good investment, and a high NAV does not mean it is expensive. By concentrating on the fund's fundamentals, you can make more informed decisions and avoid falling for common market traps.
Key takeaways
- Category: Stocks.
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