What is N.A.V. in mutual funds?

NAV stands for Net Asset Value. This depicts the value of each Mutual Fund unit and is calculated based on the underlying stocks or bonds that it holds. Here are some tips about NAVs that will help in “Happy Investing”.

Tip #1. Avoid any marketing hype about attractive or new launch NAV. A low NAV at launch doesn’t mean anything as the fund performance depends only on the portfolio that it holds. New Fund Offerings or NFO campaigns are a common marketing trick.

Tip #2. Go for Direct Plans as their NAV will grow faster than regular plan NAVs. Though they both belong to the same fund since regular plan NAVs are loaded with commissions they will grow slower.

An optical illusion may be created that a regular plan NAV is lower than direct plan. But make no mistake here. A growth from 50 to 100 is 100% growth wherea a growth from 48 to 93 is only 94% growth. Though the NAV is lower it grew by 6 percentage points slower. Of course the difference in growth is pocketed by the broker/agent.