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27 November 2007 13:15

Is Low NAV fund is better than High NAV fund?

We always think that the low NAV means the fund is cheaper. Low NAV implies high number of units alloted, however the total investment will remain unchanged with the Low NAV and high NAV fund as the total investment is the multiplication of total units and the NAV. What matters is the performance of the fund. Take for example, a fund with NAV Rs.20 is giving 20% returns and a fund with NAV Rs.100 giving 40% returns. Assume we invest Rs. 10000 in both the funds. Even though we got more number of units in the first fund, the final value of the investment in the funds become Rs.12000 and Rs.14000 respectively. This shows that the NAV is not the deciding factor in selecting the mutual fund, but the performance of the fund.

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