Key idea
Net Asset Value is the price of one unit of a fund. A low NAV does not mean a fund is cheap, and this misunderstanding costs beginners.
NAV (Net Asset Value) is the per-unit value of a mutual fund, calculated each day from the total value of its holdings divided by the number of units. When you invest, your money buys units at the current NAV.
The myth to unlearn
A ₹10 NAV fund is not "cheaper" than a ₹100 NAV fund. A low NAV just means more units; it says nothing about future returns. Two funds holding identical portfolios will give identical returns regardless of their NAV.
Why this trips people up
It feels intuitive that a ₹10 unit has "more room to grow" than a ₹100 unit, the way a cheap stock might. But a fund's NAV simply reflects its history and unit count, not its potential. If both funds grow 10%, your money grows 10% either way. Ten units of ₹10 and one unit of ₹100 are the same ₹100 invested.
Judge a fund by its strategy, costs, and track record, never by whether its NAV looks "low." New Fund Offers priced at ₹10 are not a bargain for this reason. The NAV is a scorekeeper, not a price tag.
Finished reading?
Marking this complete counts today, and your streak becomes day 1.