INSIGHT ON NFO'S LOW PRICING

Low net asset values (NAV) are not necessarily the best buys just because you are able to earn higher number of units. Let us assume you buy a mutual fund at an NAV of Rs 10 through a new fund offer (NFO) and your friend invests in another fund from the same AMC where NAV is Rs 100.




Both of you invest Rs 10,000, of which you get 1,000 units and your friend gets 100 units. Assuming the same fund manager generates 20% return on both funds, both of you would earn Rs 12,000 each. So, it’s the performance and the track record of the fund and not the NAV that matters. In an existing fund, you can see its track record, unlike an NFO.