Employee money guide

NAV and Expense Ratio Explained

Understand mutual fund NAV, expense ratio, and why cost matters for long-term investors.

Direct Answer

NAV is the per-unit value of a mutual fund scheme. Expense ratio is the annual cost charged by the fund, which affects investor returns over time.

Key Takeaways

NAV alone does not show whether a fund is cheap or expensive.
Expense ratio affects long-term returns.
Compare funds using risk, portfolio, performance, and cost together.

What NAV means

NAV is calculated from the value of fund assets minus liabilities, divided by units. A low NAV does not automatically mean a better fund.

Why expense ratio matters

Expense ratio is deducted from fund assets. Over long periods, higher costs can reduce compounding.

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FAQs

Is a lower NAV better?

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No. NAV level by itself does not indicate fund quality or cheapness.

Reviewed by the Saventh Financial Literacy Team. Educational information for Indian employees — not personalised advice. Mutual fund investments are subject to market risk. Saventh AMFI ARN 324457.

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Disclaimer: Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing. Past performance is not indicative of future returns. Please consider your specific investment requirements before choosing a fund, or designing a portfolio that suits your needs.

Saventh Investment makes no warranties or representations, express or implied, on products offered through the platform of Saventh Investment. It accepts no liability for any damages or losses, however, caused, in connection with the use of, or on the reliance of its product or related services. Terms and conditions of the website are applicable.
Investments in Securities markets are subject to market risks, read all the related documents carefully before investing.

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