High NAV, Low NAV – What Every Investor Should Know

Updated on: 14 Oct 2025

One of the most common questions when investing in mutual funds is about Net Asset Value (NAV). Since the stock market fluctuates daily, the NAV of a mutual fund also changes.

Many investors assume that a mutual fund with a low NAV is a better deal, while others think the highest NAV mutual fund means better returns.
But is that really true? Let’s break it down in simple terms.

What is NAV in Mutual Funds?

NAV or Net Asset Value is simply the cost of a single unit of a mutual fund. It represents the per-unit price at which investors can buy or sell fund units. The NAV is calculated by taking the total value of the fund’s assets (like stocks, bonds, and cash) minus its liabilities and then dividing it by the total number of units.

For example, if a mutual fund’s total value is ₹100 crore and it has 10 crore units, the NAV will be ₹10 per unit.

A common question among beginners is, ‘how much NAV is good in mutual fund?’ The truth is, NAV by itself does not decide if a fund is good or bad. What really matters are factors like past performance, consistency and whether the fund matches your financial goals.

Does a Low NAV Mean a Better Investment?

Many investors believe that a low NAV mutual fund is cheaper and therefore better. But this is actually a myth. NAV is not like a stock price — it only shows the current value of one unit.

For example, if two funds have the same portfolio but one has an NAV of ₹10 and the other ₹100, they can both generate the same percentage return. The difference is only in the starting value, not in the growth potential.

Instead of asking ‘NAV should be high or low?’, focus on the factors that truly matter:

Past performance and consistency

Experience and track record of the fund manager

Asset allocation and investment strategy

Expense ratio (the lower, the better)

So, what is a good NAV for a mutual fund? The answer is there is no ‘good’ or ‘bad’ NAV. What matters is the quality of the fund’s portfolio and how it performs over time.

Does a High NAV Mean Better Returns?

Some investors avoid funds with high NAVs, thinking they are ‘too expensive’. But this is not correct. A high NAV simply indicates that the fund has been in the market longer and has grown in value over time.

For example, if Fund A has a NAV of ₹50 and Fund B has a NAV of ₹500, but both deliver 12% annual returns, the investor’s gain is the same in percentage terms.

So, instead of worrying about ‘NAV should be high or low in mutual fund’, investors should focus on:

Risk-adjusted returns

Consistency in performance

Whether the fund aligns with your financial goals

Remember: NAV is just the price per unit, not an indicator of whether a fund is expensive or cheap in terms of returns.

Should You Invest in a Low NAV Mutual Fund?

Investing in a mutual fund should always align with your financial goals, not just the NAV. Many investors search for a low NAV mutual funds list, thinking they are getting a better deal, but this can be misleading.

Instead of making decisions based only on NAV, look at:

Past performance and risk management

Fund manager’s expertise

Expense ratio

Investment strategy and asset mix

A low NAV mutual fund does not mean the fund is undervalued, and a high NAV does not mean it’s out of reach. Both can provide good returns depending on performance and strategy.

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FAQs on Low or High NAV

Does NAV matter in index funds?

Not really. Index funds are designed to replicate the market index, so NAV just reflects the per-unit cost. What matters is whether the fund tracks the index efficiently.