Learn More About Mutual Fund Navs

It does happen that an investor sometimes ends up choosing a mutual fund looking primarily at the mutual fund NAV (Net Asset Value)

. While looking at it is hardly a bad thing, allowing it to influence your decision about investing in a mutual fund or hoping that it will help affect the mutual fund performance is not always the right way to go. The first thing you need to know about the NAV of any fund is that it is basically the purchase price of a mutual fund. Whether you are buying or selling a mutual fund, the NAV is what is considered as the purchasing or selling price. The NAV is calculated at the end of each day. You need to understand that your funds NAV is affected by the value of the stocks of the mutual fund investment. But the NAV itself does not influence the performance too much.

There are always some investors who believe that buying a fund with a low NAV would likely ensure higher returns for the investor, but this need not be true. The sheer fact is that the NAV has little to no influence on the performance, and so buying a mutual fund based on that alone will probably set you up for a disappointment. Remember that the daily NAV might help you assess the value of the investment for the day, but that it doesnt really help to assess the performance. When you do want to assess the performance, you want to look at the NAV over a long period of time, and even then, you should remember to look at the annual returns of the investment. It isnt the NAV but the quality of the fund that you want to look into so check thoroughly how well the investment has given returns over a long period of time.

At the end of the day, you have to remember that your NAV is not the same as the share price they are two different concepts. You can at least know that over time, if the NAV increases, the fund is performing well; and if the NAV decreases over time, the fund isnt performing too well. Another thing to remember is that a lower mutual fund NAV doesnt give you higher returns. What you should actually consider while investing in it is real time performance and its scheme, instead of the NAV. That will be what helps you out more, in the end.

by: Angel

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