I am interested to invest in this fund mainly because of the fact that its NAV is below par due to which it will be able to give higher yield on dividend. do you agree wth me? I am likely to retire shortly, hence this higher dividend can be an income source. Please advise.
There is a difference between the price of a listed security and the NAV of a mutual fund scheme. Listed security has a price determined by the demand and supply of the security. Whereas the NAV of the scheme has a value determined mathematically, by the prices of the securities in the portfolio.
If the portfolio appreciates by 10 per cent the Rs15 NAV will become Rs 16.5 and Rs 150 NAV will become Rs 165. So in whatever the NAV you invest your investment will fetch you only 10 per cent return.
So instead of concentrating on low NAV and more number of units, it is worthwhile to consider other factors (performance track record, fund management, volatility) that determine the portfolio return.
A fund with higher NAV may give higher returns than a fund with lower NAV if its stocks did better in the markets. So, the price per unit of a mutua ...more
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