Archive · 1 Aug 2025
₹10 NAV Myth: Why Low-Priced Mutual Funds Aren't a Deal
Imagine a pizza cut into slices: the number of slices (NAV) doesn't change the pizza's size (investment value).
A ₹10 NAV fund isn't cheaper than a ₹100 one; it just means more units.
Returns depend on what the fund invests in, not the initial price.
People believe it's cheaper due to habits, marketing, and lack of industry clarification.
Before investing, check the fund manager's experience, the investment plan, and if the fund offers something new.
It's okay to skip a new fund offer (NFO).
A ₹10 NAV for a mutual fund is not a sign of a good deal, despite common belief.
NAV (Net Asset Value) represents the value of one fund unit; the initial price does not impact future returns.
The myth persists due to psychological biases, industry practices, and ease of conversation.
Investors should assess fund managers, investment plans, and fund uniqueness before investing.
It's acceptable to avoid an NFO; long-term goals matter more than early entry.
- Who
- Deepak Shenoy, founder of Capitalmind, and investors in mutual funds.
- What
- Misconceptions about the significance of a ₹10 NAV in mutual fund investments.
- When
- N/A
- Where
- N/A
- Why
- To debunk the myth that a low NAV indicates a good investment and to encourage a more informed approach to fund selection.
Fund Managers/Marketers
Informed Investors
Importance of NAV
Fund Managers/Marketers
Promote low NAV as attractive to increase sales and gather assets quickly.
Informed Investors
Focus on overall returns, fund management, and long-term strategy rather than the NAV.
- NAV
- Net Asset Value, the per-unit value of a fund
- NFO
- New Fund Offer
- Example NAVs
- ₹10, ₹100, ₹1,000
- Investment Growth Factor
- Percentage return on investment
- Focus
- Educating investors about financial literacy.