Mutual Fund NAV: Debunking Myths and Understanding Its True Role in SIPs
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Moneycontrol•21-01-2026, 15:59
Mutual Fund NAV: Debunking Myths and Understanding Its True Role in SIPs
- •Many investors mistakenly believe low NAV means a fund is cheap, leading to panic selling during market dips.
- •NAV is the per-unit price of a mutual fund's portfolio, calculated daily based on assets, liabilities, and units.
- •A high NAV does not mean a fund is expensive; older funds naturally have higher NAVs due to longer compounding.
- •NAV fluctuates daily due to changes in underlying asset prices, expense ratio deductions, and dividend payouts.
- •For SIP investors, falling NAVs are beneficial as they allow for the accumulation of more units, leading to better long-term returns.
Why It Matters: NAV is not an indicator of a fund's value; focus on performance, expense ratio, and market cycles for investment decisions.
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