Two mutual funds. One shows an NAV of ₹12, the other ₹180. Most investors pause here, thinking, “Lower NAV means I get more units, so it must be cheaper and better!” That assumption? A big mistake that could derail your investment goals.

Here’s the truth: a fund’s NAV has zero impact on its growth potential. What matters is the quality of the portfolio and the fund manager’s strategy—not the price per unit.

Before we dive in, here’s a quick tip: Instead of checking NAV, check the fund’s consistency over 3–5 years and whether it aligns with your financial goals. This single habit can protect you from poor choices.

If you’re still unsure about picking the right fund, Speak to a Cube Wealth Coach and get a personalized plan that works for your goals.

In this article, you’ll learn:
✔ Why NAV is misunderstood (and why marketers use it to hook you).
✔ How NAV works in reality (with simple examples).
✔ Common myths about low vs. high NAV funds.
✔ A practical checklist for smart mutual fund investing.

Let’s bust the NAV myth once and for all.

What Is Mutual Fund NAV & Why Investors Obsess Over It

NAV (Net Asset Value) is simply the price of one unit of a mutual fund. It’s calculated by dividing the fund’s total assets minus liabilities by the number of outstanding units.

For example:

• If a mutual fund has ₹100 crore in assets and 10 crore units, the NAV is ₹10.
  

Sounds straightforward, right? That’s why investors assume:

• Lower NAV = cheaper fund
• Higher NAV = expensive fund

But that’s like thinking a ₹10 stock is better than a ₹1,000 stock. The truth? The stock price or NAV doesn’t tell you anything about value or future growth.

Example:
Imagine two funds, A and B. Both invest ₹1,00,000 in the same portfolio.

• Fund A starts at ₹10 NAV → You get 10,000 units.
• Fund B starts at ₹100 NAV → You get 1,000 units.

If the portfolio grows by 10%, both funds increase by 10%. Fund A’s NAV becomes ₹11, and Fund B’s becomes ₹110. Your investment in both cases is ₹1,10,000. Units don’t matter, but returns do.

Why NAV Shouldn’t Be a Deciding Factor

In India, investors often treat NAV like an MRP tag. But here’s why that approach is flawed:

1. NAV Reflects Age, Not Value

Older funds usually have higher NAV because they’ve existed longer, not because they’re better. A new fund starting today could have an NAV of ₹10, and an old one could have ₹500. Neither says anything about performance.

2. Performance Depends on Portfolio, Not Price

Whether the NAV is ₹10 or ₹200, the portfolio composition drives returns. A poorly managed ₹10 NAV fund will still underperform a well-managed ₹200 NAV fund.

3. Marketing Gimmick Alert

New fund offers (NFOs) use “low NAV” as a selling point. They make investors feel like they’re buying cheap. But remember, a low NAV fund is not a discount deal.

Why This Matters More in 2025 Than Ever

The rise of digital platforms has made investing accessible, but also overwhelming. Investors see NAV highlighted on apps like Groww or Zerodha and assume it’s a key metric. Combine that with social media chatter, and myths spread fast.

Recent trend: Post-pandemic, NFOs surged in India. In FY2022, AMFI reported ₹62,000 crore collected through NFOs. Many first-time investors jumped in for the “low NAV advantage” only to be disappointed later.

If you’re saving for goals like a child’s education or a home loan down payment, falling for the NAV myth could set you back years. Instead, focus on factors like:

• Expense ratio
• Consistency of returns
• Fund manager’s track record
• Asset allocation

Common Myths About Mutual Fund NAV (and the Truth)

Myth 1: Lower NAV = Cheaper and Better

Truth: NAV has no link to affordability. Your investment value grows based on portfolio performance, not NAV.

Example: If you invest ₹10,000 in two funds, one at ₹10 NAV and another at ₹200 NAV, both give the same return percentage.

Myth 2: High NAV Means Expensive Fund

Truth: High NAV just means the fund has existed longer or grown more. It doesn’t make it “costlier.”

Myth 3: More Units = More Wealth

Truth: 10,000 units at ₹10 or 1,000 units at ₹100, your total value is the same. Units are just math.

Myth 4: New Fund Offers Are Always Attractive

Truth: NFOs often attract investors by highlighting low NAV. But past performance data isn’t available for NFOs, making them riskier.

How to Pick the Right Mutual Fund (Instead of Looking at NAV)

Here’s a simple checklist for Tier-1 city professionals (30–50 years old):

✔ Define Your Goal: Child’s education? Retirement? Wealth creation?
✔ Check Fund History: At least 3–5 years of consistent performance.
✔ Look at Risk & Asset Allocation: Does it suit your risk appetite?
✔ Compare Expense Ratios: Lower ratio = better for long-term returns.
✔ Read Fund Objective: Does it align with your goals?

Pro Tip: Use government-backed tools like SEBI’s Mutual Fund Information Portal to verify facts before investing.

Still confused? Speak to a Cube Wealth Coach for a personalized investment strategy.

FAQs About Mutual Fund NAV

1. Does NAV affect mutual fund returns?

No. NAV only represents the price per unit of a mutual fund, not its performance. Returns depend on the underlying portfolio and market conditions, not the NAV.

2. Is it better to buy a mutual fund with low NAV?

No. A lower NAV does not make a fund cheaper or better. Both low and high NAV funds can deliver the same percentage returns.

3. Why do new mutual funds start with ₹10 NAV?

New funds generally start at ₹10 for simplicity and standardization. It doesn’t affect the future performance of the fund.

4. Can NAV go down to zero?

It’s extremely rare, but theoretically possible only if all underlying assets lose value completely, which is unlikely in a regulated mutual fund.

5. How should I choose a mutual fund if not by NAV?

Look at long-term performance, risk profile, expense ratio, and alignment with your goals instead of focusing on NAV.

6. Should I invest during an NFO?

Only if the fund’s strategy and category fit your goals—not because of low NAV.

7. Is NAV the same as stock price?

No. Stock prices reflect demand and supply; NAV reflects underlying asset value.

Conclusion

Your mutual fund’s NAV is just a number—not a predictor of returns. Stop chasing “cheap” NAVs and start chasing quality investments. Focus on your goals, evaluate performance history, and invest smartly.

Want clarity on which funds to choose? Speak to a Cube Wealth Coach and start your journey toward smarter investing today.

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