Is mutual fund with a low NAV better?

NAV in Mutual Fund

The Net Asset Value (NAV) of a mutual fund represents the per-share market value of all the securities held in the fund's portfolio. Whether a mutual fund with a low NAV is better depends on various factors and your investment goals. Here are some considerations:

1. NAV Doesn't Indicate Performance: The NAV alone doesn't tell you much about the fund's past or future performance. It's just a price at which you buy or sell shares in the fund. Two funds with different NAVs can have similar or vastly different performance histories.

2. Affordability: A lower NAV can make it seem more affordable, especially for new investors. However, the number of shares you own depends on the amount of money you invest, not the NAV. So, the affordability factor is more psychological.

3. Historical Performance: Evaluate a fund's historical performance, including its risk-adjusted returns, consistency, and how it compares to benchmark indices and peer group averages.

4. Investment Objectives: Consider your investment objectives. Some funds may have a lower NAV because they invest in specific types of assets or sectors. Make sure the fund aligns with your investment goals.

5. Diversification: Diversification is key to risk management. A low NAV doesn't necessarily indicate a well-diversified portfolio. Look at the fund's holdings and how they align with your risk tolerance.

6. Exit Load: Some funds may have exit loads (fees) that vary based on how long you've held the investment. These fees can impact your returns when you sell shares.

7. Tax Implications: Consider the tax implications of buying or selling shares in a mutual fund. High turnover funds can generate capital gains taxes.

In summary, the NAV of a mutual fund is just one factor to consider when making an investment decision. It's important to look at the overall picture, including historical performance and how well the fund aligns with your investment goals and risk tolerance. A low NAV alone should not be the sole criterion for choosing a mutual fund.Kindly consult your Financial Advisor before investing.

Disclaimer: Mutual Funds investments are subject to market risks, read all scheme related documents carefully before investing.