If there is one myth that fund distributors love to propagate, it is that a fund with a low net asset value (NAV) is cheaper. 'The NAV is just Rs 10,' is their sales pitch. As a result, investors flock to new fund offerings (NFOs) to exploit this so-called cost advantage.
In actuality, the NAV is totally irrelevant and should not even be considered when making an investment. Let's say that two funds have identical portfolios but different NAVs. One has been around for a while and has a higher NAV than the newly-launched fund. However, as the value of their (identical) holdings increase, the NAV will rise by the same percentage. So investors in both will benefit equally.
