NAV Should Be High or Low in Mutual Funds?

You do not need to choose a mutual fund simply because its NAV is high or low. What matters more is the quality of the fund, its investment strategy, the fund manager, and whether it matches your financial goals. A low NAV does not make a fund cheaper, and a high NAV does not make it expensive.

• NAV is the price of one mutual fund unit and is calculated every business day after market hours. 
• Your investment value depends on the percentage growth of the NAV, not its starting value. 
• A lower NAV gives you more units, while a higher NAV gives you fewer units for the same investment amount. 
• Direct and regular plans of the same scheme may have different NAVs because their expense ratios differ. 
• You can invest through SIP or lumpsum on the Bajaj Broking website, with SIP investments starting from Rs. 100 per month. 
• Before investing, complete your KYC, which is mandatory under SEBI regulations. 

Start your mutual fund investment journey on the Bajaj Broking website by completing your KYC, exploring more than 4,000 mutual fund schemes, and beginning a SIP from Rs. 100 per month.

NAV or Net Asset Value is the price of one unit of a mutual fund. It is calculated after the market closes each business day.

The NAV is calculated by adding the total market value of all investments in the scheme, subtracting liabilities, and dividing the result by the total number of outstanding units.

Formula

NAV = (Total Assets − Total Liabilities) ÷ Total Outstanding Units

The NAV changes every day because the value of the securities held by the fund also changes.

It is important to remember that NAV is only the price of one unit. It does not tell you whether a mutual fund is good or bad.

Since mutual fund returns are market-linked, always check the SEBI riskometer, which classifies schemes as Low, Low to Moderate, Moderate, Moderately High, High, or Very High risk.

Many investors believe a low NAV means a mutual fund is cheaper. This is not correct. Whether the NAV should be high or low has little impact on your future returns.

Imagine two funds.

Suppose both funds grow by 10%.

Although you received more units in Fund A, your return is exactly the same because both funds increased by the same percentage.

When choosing a mutual fund, focus on:

• Investment objective 
• Fund category 
• Risk level shown on the SEBI riskometer 
• Long-term performance across market cycles 
• Portfolio quality 
• Expense ratio 
• Whether the fund suits your financial goals 

Instead of asking whether NAV should be low or high, ask whether the fund fits your investment needs.

Some investors search for mutual funds with low NAV and high returns because they believe these funds have greater growth potential. However, NAV alone does not determine future performance.

Advantages

• You receive more units for the same investment amount. 
• Lower NAV may feel psychologically attractive to new investors. 
• It is easier to understand unit allocation. 

Disadvantages

• A low NAV does not mean the fund is undervalued. 
• Future returns depend on the fund's investments, not its NAV. 
• New funds often start with a low NAV but may not outperform older funds. 
• Comparing funds only by NAV can lead to poor investment decisions. 

A good mutual fund should be selected based on its investment process, risk level, consistency, and suitability for your financial goals rather than its NAV.

A high NAV does not mean a mutual fund is expensive or has less room to grow. It simply means the value of one unit has increased over time or that the fund started with a different launch NAV. When deciding between a high NAV or low NAV, focus on the fund's quality instead of its unit price.

Advantages

• A high NAV may reflect long-term growth in the scheme's portfolio. 
• Older funds with a consistent investment strategy may have a higher NAV due to years of market appreciation. 
• You receive returns based on percentage growth, regardless of the number of units you own. 

Disadvantages

• A high NAV does not guarantee better future returns. 
• You receive fewer units for the same investment amount. 
• Choosing a fund only because it has a high NAV may lead you to ignore important factors such as risk, portfolio quality and investment objective. 

Whether the NAV value should be high or low is not the right question. Instead, evaluate whether the mutual fund matches your financial goals, investment horizon and risk appetite.

A SIP allows you to invest a fixed amount at regular intervals into a mutual fund scheme. Since the NAV changes every business day, the number of units you receive with each SIP instalment also changes.

The entire investment process is available online through the Bajaj Broking website. You can start a SIP from Rs. 100 per month after completing your mandatory KYC.

1. Complete your KYC using the required identity and address documents, as mandated by SEBI. 
2. Choose a mutual fund scheme that matches your investment goals and risk profile. 
3. Select SIP as your investment mode and enter the monthly investment amount. SIPs start from Rs. 100 per month. 
4. Set your preferred SIP date and complete the payment mandate. 
5. Receive units based on the applicable NAV on each SIP investment date. 
6. Track your investments using the Dashboard, Portfolio, Orders and MF Profile available on the Bajaj Broking website. 

Mutual funds are subject to market risk. Please read the scheme-related documents carefully before investing.

Example of SIP and NAV

Suppose you invest Rs. 5,000 every month.

When the NAV is lower, you receive more units. When the NAV is higher, you receive fewer units. Over time, this process is known as rupee cost averaging, which is one reason many investors choose SIPs for long-term investing.