IS LOWER NAV BETTER?
Because it brings us more number of units?
Definitely not. There is this myth among ivestors about this Lower NAV, and the NFOs (New Fund Offers) launched at an issue price of Rs 10 are perceived to be a good investment opportunity by a large section of mutual fund investors. Similarly, existing mutual funds with a lower NAV often appeal more to investors. And often investors try to avoid funds with higher NAV, most of which are actually very excellent fuunds. Is it not that since they are performing well and so they have a higher NAV? (ie., that not just they are older funds)
The amount of one's investment remaining constant, between two mutual funds with same portfolios, investment in a low NAV would give a higher number of units and that in a high NAV would give lower number of units. But in both the cases, the product of the number of units and the applicable NAV, which is the value of your investment, would be the same. Thus, it is the stocks in a portfolio that determine returns from a fund, the value of the NAV being immaterial.
Often people mistake that the NAV Rs.10 may not fall downside in adverse market conditions. At recent fall of sensex to 8000, NAV of a worst performing fund was Rs.1.97/-. A loss of Rs.8/- in a fund with an NAV of Rs.80 means 10% loss and the same Rs.8/- in a fund with a NAV of Rs.10/- means 80% fall. And the fund is performing far worse! Without knowing this people try to buy these fund at Rs.1.97/- because it brings them more number of units!
Mutual fund schemes are to be judged based on their performance relative to their risk profile, bench mark index and peers compared for similar periods.
For Selecting, investing best mutual fund schemes, SIP, STP and after servicing please contact
C.RAMESH
098941 05790
maharajramesh@gmail.com
VISIT THIS BLOG FOR REGULAR INVESTMENT ADVICE
‘‘The reasonable man adapts himself to the world. Theunreasonable one persists in trying to adapt the world to himself.Therefore all progress depends on the unreasonable man.’’-- George Bernard Shaw
GENEROSITY
Zen master Ryokan (1758-1831) lived austerely and simply in a little hut below a mountain. One evening a thief visited the hut only to find nothing there to steal. So he went off into the night. Ryokan caught up with him: “You may have come a long way to visit me, and you should not return empty handed. Please take my clothes as a gift.” The bewildered thief took the clothes and slunk away. Ryokan sat naked, watching the moon. “Poor fellow,” he mused, “I wish I could give him this beautiful moon!”
Because it brings us more number of units?
Definitely not. There is this myth among ivestors about this Lower NAV, and the NFOs (New Fund Offers) launched at an issue price of Rs 10 are perceived to be a good investment opportunity by a large section of mutual fund investors. Similarly, existing mutual funds with a lower NAV often appeal more to investors. And often investors try to avoid funds with higher NAV, most of which are actually very excellent fuunds. Is it not that since they are performing well and so they have a higher NAV? (ie., that not just they are older funds)
The amount of one's investment remaining constant, between two mutual funds with same portfolios, investment in a low NAV would give a higher number of units and that in a high NAV would give lower number of units. But in both the cases, the product of the number of units and the applicable NAV, which is the value of your investment, would be the same. Thus, it is the stocks in a portfolio that determine returns from a fund, the value of the NAV being immaterial.
Often people mistake that the NAV Rs.10 may not fall downside in adverse market conditions. At recent fall of sensex to 8000, NAV of a worst performing fund was Rs.1.97/-. A loss of Rs.8/- in a fund with an NAV of Rs.80 means 10% loss and the same Rs.8/- in a fund with a NAV of Rs.10/- means 80% fall. And the fund is performing far worse! Without knowing this people try to buy these fund at Rs.1.97/- because it brings them more number of units!
Mutual fund schemes are to be judged based on their performance relative to their risk profile, bench mark index and peers compared for similar periods.
For Selecting, investing best mutual fund schemes, SIP, STP and after servicing please contact
C.RAMESH
098941 05790
maharajramesh@gmail.com
VISIT THIS BLOG FOR REGULAR INVESTMENT ADVICE
‘‘The reasonable man adapts himself to the world. Theunreasonable one persists in trying to adapt the world to himself.Therefore all progress depends on the unreasonable man.’’-- George Bernard Shaw
GENEROSITYZen master Ryokan (1758-1831) lived austerely and simply in a little hut below a mountain. One evening a thief visited the hut only to find nothing there to steal. So he went off into the night. Ryokan caught up with him: “You may have come a long way to visit me, and you should not return empty handed. Please take my clothes as a gift.” The bewildered thief took the clothes and slunk away. Ryokan sat naked, watching the moon. “Poor fellow,” he mused, “I wish I could give him this beautiful moon!”
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