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Following are 3 mistakes about Mutual fund
1) Low NAV Is Better As You Get More Units:
This myth about mutual fund NAV is probably why most investors pour their money to purchase units in newly launched funds (New Fund Offers or NFOs). The logic is that since the NAV is Rs. 10 in the NFOs, it is better to invest in them and accumulate more units rather than investing in a fund that has a higher NAV.
2) Higher NAV indicates Good Performance:
The historical NAV of a Mutual Fund is Rs. 10 at the time of its NFO, Thus, many investors compare the NAV of two funds and jump to the conclusion that the fund with higher NAV must have performed better between the two schemes in the past. But that is not necessarily true. The NAV of a fund could be higher just because the fund has existed for a longer period.
3) NAV Can Be Negative:
Often investors see that the NAV of their fund has fallen by a certain percent and think that their NAV has become negative. This is certainly not the correct way to look at NAV. Yes, the daily change in the NAV can be negative, but the absolute NAV number can never be negative.
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