Torus Digital | Toruscope

Does High or Low NAV Really Matter in Mutual Funds?

Swipe to know more >>

• NAV (Net Asset Value) represents the per-unit price of a mutual fund.

• It is calculated as: 
NAV = (Total Assets – Total Liabilities) ÷ Total Units Outstanding

• A higher NAV does not mean the fund is expensive, and a lower NAV doesn’t make it cheap. What matters is the fund’s performance over time.

Understanding NAV in Mutual Funds

NAV: Meaning

• High NAV: Often perceived as “costly” but just reflects accumulated growth since inception.

• Low NAV: Might seem “affordable,” but doesn’t guarantee higher returns.

• Returns are determined by percentage growth, not absolute NAV.

High NAV vs Low NAV: Key Misconceptions

How NAV Affects Investors

• Investors earn through capital appreciation and dividends.

• Buying at high or low NAV doesn’t impact percentage gains if holding period is long.

• Focus on fund performance, risk profile, and investment horizon rather than NAV. 

NAV Impact

Comparing Two Funds: NAV Isn’t Everything

Fund             NAV         1-Year Return
 
Fund A         ₹150                 12%
Fund B         ₹50                   12%

Both funds gave the same return despite different NAVs.

Factors That Matter More Than NAV

• Fund’s historical performance 

• Fund manager expertise 

• Expense ratio & charges 

• Fund’s risk-adjusted returns

Focusing solely on NAV can be misleading for your investment strategy. 

High or low NAV should not drive your investment decision. 

Instead:

i. Evaluate the fund’s past performance and consistency

ii. Understand your investment goals and horizon

iii. Focus on long-term growth potential

Takeaway for Investors

Conclusion: NAV Is Just a Number

• NAV indicates the per-unit value but doesn’t define fund quality.

• Smart investors prioritise returns, risk, and fund objectives over absolute NAV numbers.
Open a Demat Account
Follow Our Instagram