Money Basics · SIPs & mutual funds

NAV, why a ₹15 fund isn't 'cheaper' than a ₹500 one

The single most common mutual fund misunderstanding: "This fund's NAV is only ₹15, it's cheap! That one is ₹500, it's expensive." Completely, mathematically wrong.

What NAV actually is

NAV (Net Asset Value) = total value of everything the fund owns ÷ number of units. It's the price of one unit. Updated once daily after markets close (not live like a stock price).

Why 'cheap NAV' is meaningless

You invest ₹10,000:

1. Fund A, NAV ₹15 → you get 666.67 units

2. Fund B, NAV ₹500 → you get 20 units

Both portfolios grow 10% this year. Fund A's NAV → ₹16.5, yours = ₹11,000. Fund B's NAV → ₹550, yours = ₹11,000. Identical. Your return depends only on the percentage growth of the fund's holdings, never on the sticker price of a unit.

> A low NAV usually just means the fund is NEW, not cheap. A ₹500 NAV means the fund is old and has grown 50× since launch, if anything, evidence of a long track record.

Why this myth is dangerous

Salespeople exploit it to push NFOs (New Fund Offers): "Get in at ₹10, ground floor!" There is no ground floor. An NFO at ₹10 has zero history, unknown performance, and often launches to catch a trend at its hype peak. A boring old fund with a ₹400 NAV and a 15-year record is almost always the better buy.

% growththe only number that determines your return

₹10where almost every fund's NAV starts at launch, newness, not value

Takeaway. NAV is just units-math. A ₹15 fund isn't cheaper than a ₹500 one. Judge funds on track record and costs, never on NAV, and be wary of 'ground floor' NFO pitches.