📘 NAV, NFO & Investor Options in Mutual Funds
📊 1. Net Asset Value (NAV)
- The true worth of one unit of a mutual fund scheme is called NAV (Net Asset Value)
👉 If investments perform well:
- NAV increases 📈
👉 If investments make losses:
- NAV decreases 📉
✔ NAV reflects the current value of the scheme’s investments
🚀 2. New Fund Offer (NFO)
- When a scheme is launched for the first time, it is called a New Fund Offer (NFO)
👉 During NFO:
- Units are usually available at face value (e.g., ₹10)
👉 After NFO:
- Units are bought/sold at NAV-based price
💰 3. Investment & Risk
- Money collected is invested as per the scheme’s objective
- Profit or loss belongs to investors
👉 Important:
- Investor’s loss is limited to the amount invested
- No extra liability (unlike some other investments)
🔄 4. Investor Options in Mutual Funds
Different investors have different preferences, so mutual funds offer options:
💵 Dividend Payout Option
- Regular income is paid to investors
- NAV reduces after payout
🔁 Dividend Re-investment Option
- Dividend is reinvested into the scheme
- More units are allotted
📈 Growth Option
- No dividend paid
- Profits are reinvested automatically
- NAV grows over time
👉 Best for long-term wealth creation
🧠 Easy Summary (Exam Ready)
👉 NAV represents the value of a unit. During NFO, units are issued at face value, and later at NAV. Investors bear profits/losses up to their investment, and can choose options like dividend payout, reinvestment, or growth based on their needs.
