Experts advise not to invest in any equity mutual fund by looking at its NAV. These experts also say that it is wrong to assume that a higher NAV means a better return and vice versa. However, when NAV of an equity fund with an initial NAV of Rs 10 reaches the level of Rs 2,000, it is a testament to the mind blowing performance of that fund. It often happens that the share price of a company in the stock market reaches Rs 2,000 , but it is rare for an equity mutual fund to reach that level. The reasons are obvious . Although the Indian stock market has a long history, it was around year 1993 that various companies started entering the Indian mutual fund business. Even in the early days, the number of new mutual funds coming into the market was very low. Mutual funds, which came into the market in 1993 and in the next two- three years and have consistently performed well, are also limited in numbers. As a result, equity funds with a NAV of around Rs 2,000 is a rare case . One such fund is Nippon India Growth Fund.
The story of Nippon India Growth Fund
The NAV (Growth Option) of Nippon India Growth Fund, which was launched in October 1995,
recently touched Rs 2,000. At the time of launch, the fund had a NAV of Rs 10 per unit, but in the last 26 years, it has reached Rs 2,000 per unit, with an average annual return of 22 percent. This means that the present market valuation of initial investment Rs 1 lakh in this fund is around Rs 2 crore. The performance of SIP investments in this fund is similarly glorious. An investor who has invested Rs 10,000 per month in the fund through SIPs for the last 20 years ,has market value of around Rs. 3 Crores at present . Due to the excellent performance of the fund, investors have invested heavily in this fund, that is why the assets of this fund are huge at around Rs 11,000 crore. The fund has mainly invested in shares of medium-sized companies in the stock market . Although the fund's performance has faltered in the short run, it has been very healthy in the long run. Of course, whenever the stock market collapsed ,there was a loss on investment in this fund. In such a situation, some investors withdrew their investments but the prudent investors saw such situation as an opportunity and made a lump sum investment in the fund. To give a more recent example, the fund's NAV plummeted in March 2020 when the Indian stock market collapsed due to the arrival of the Corona. However investors who then invested at this reduced NAV are now seeing the benefits. The current market value of Rs 1 lakh invested in the fund in March 2020 is almost Rs 2.50 lakh ( October 2021). Of course, it is not always possible for every investor to invest in such market conditions . Therefore, it is wise to have regular SIP in such a fund and keep the couple investing lump sum amount , as much as possible ,in case the market collapses.
The above information of Nippon India Growth Fund is just an example. Many such funds are available for investment in the market. All you need to do is invest regularly in the long run !
(The author is associated
with Indira Global Business School )
with Indira Global Business School )
Blog By
Dr. Virendra Tatake
Director
Indira Global Business School, Pune
Mail- ID- director@indiragbs.edu.in.
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