InvestorQ : Mutual fund with lower NAV is better or not? what are the tax benefits which we can get in mutual funds and what will be it's charges?
Poornima Singh Bhadoria made post

Mutual fund with lower NAV is better or not? what are the tax benefits which we can get in mutual funds and what will be it's charges?

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3 years ago
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In all my career in the stock market, I have noticed many investors especially beginners asking similar questions regarding NAV on mutual fund schemes.
Understand NAV- is a market price of a or the value of its assets excluding its liabilities per unit. the NAV of the mutual fund scheme shows us the fund’s intrinsic worth.

It would be a misconception if one invest in Mutual Funds with low NAV to gain more units. It does not matter with the High or Low NAV, returns will be the same. Also, dont worry about the price, high NAV does not mean pricy or vice versa.

Coming to your second question;
For tax saving scheme in Mutual funds, I would like to recommend Equity-Linked Saving Scheme (ELSS). It is one of the popular tax-saving instruments under Section 80C. This scheme is an ideal diversified equity funds in equity shares of companies across market capitalization.

The answer to your third question is, in Mutual funds types are charged primarily divided into 2 types :

A) Transaction charges a) Entry load b) Exit load B)Recurring expenses.

Transaction charges are attracted to the investor at the time of investment. Investors investing through an intermediary like a mutual fund distributor, have to bear transaction charges. But if he wants to avoid this charge he can simply invest directly in the funds.

Entry load is charged by the fund house to investors on purchase of units of a mutual fund scheme. SEBI abolished entry loads in August 2009. Prior to such announcement, the entry load was near to 2.25% for equity funds.

Exit load is vice versa of entry load, i.e., if the investor redeem units of a mutual fund scheme he will be entitled to pay charges called exit load to the respective fund house. The exit load ranges between 1-3%. It depends on the tenure of the fund.

Recurring expenses are nothing but the Total Expense Ratio (TER) that are charged as a percentage of the average asset under management. It differs with the size of the fund and exposure to equity. For a first-time investor, AMCs charge around Rs 150 as a fee. For an investment with more than Rs 10,000, nearly Rs.100 is charged, and Nil cost if investment amount less than Rs.10000

Concluding all I would advise you to compare mutual fund on the basis of its expense ratio and then shortlist the fund.

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