Investors often prefer high-NAV mutual funds thinking they are better or more successful. However, NAV (Net Asset Value) simply shows the price per unit and does not indicate performance. Two funds with similar returns can have different NAVs, but the percentage return remains the same. Choosing a fund based only on high NAV is a common mistake and doesn't help in better wealth creation.

What Does High NAV Really Mean?

High NAV only means that the fund's price per unit has increased over time. It shows how much the value of each unit is today. It does not mean the fund is more profitable or guaranteed to perform better. NAV is like the price tag—what really matters is the percentage return over time.

Why Do Investors Think High NAV Is Better?

Many investors think a high NAV means the fund has performed better, similar to a stock price. But mutual funds work differently. A low or high NAV doesn't change the percentage of return. For example, ₹10 growing to ₹15 gives the same return as ₹100 growing to ₹150. It’s the return percentage that matters, not the NAV value itself.

How Do High and Low NAV Funds Offer Same Returns?

If two funds grow at the same rate, they give the same return even if their NAVs are different. For example, if Fund A with NAV ₹10 grows to ₹11 and Fund B with NAV ₹100 grows to ₹110, both give a 10% return. So, choosing a fund just because its NAV is high makes no real difference in returns.

Why Is Past Performance More Important Than NAV?

Past performance, consistency, fund manager experience, and portfolio quality matter more than just NAV. A fund with a low NAV can be new or undervalued but may have strong potential. Looking only at NAV hides these important details and can lead to poor fund selection.

What Mistakes Do People Make When Picking High NAV Funds?

People often assume high NAV means guaranteed returns or better safety. They may ignore other factors like expense ratio, fund strategy, or risk profile. Some may think more units from low NAV means better value, but in mutual funds, the number of units doesn't matter—returns do. Choosing based only on NAV can lead to wrong fund choices.

What Should You Really Look for in a Mutual Fund?

Instead of focusing on NAV, look at the fund’s track record, risk-adjusted returns, fund manager experience, consistency, and how well it matches your financial goals. These factors give a clear picture of a fund's quality and help you choose a fund that can grow your wealth steadily over time.