Exposed: The Myths of Mutual Funds
# Invest in Fund with a lower Net Asset Value
The amount of your investment remains unchanged, between two funds with identical portfolios. A low NAV would mean a higher number of units held and consequently a high NAV would mean lower number of units held.
But under both circumstances, the product of the number of units and the applicable NAV, which is the value of your investment, would be identical. Thus it is the stocks in a portfolio that determines returns from a fund, the value of the NAV being immaterial.
A Mutual Fund’s NAV represents the market value of all its investments. The NAV will depend on the price movement of its portfolio of companies. Thus the level of a scheme’s NAV should not be considered at the time of purchase.
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