Many investors habitually check their mutual fund NAVs (Net Asset Values) and fund values daily, similar to how stock market participants track share prices. But does daily monitoring actually improve returns, or does it only create unnecessary stress? Here’s a detailed explanation.
What is NAV?
NAV, or Net Asset Value, represents the per-unit price of a mutual fund. It is calculated at the end of each trading day based on the total value of all assets in the fund. When you invest in a mutual fund, you receive units at the prevailing NAV. The NAV fluctuates according to the market value of the stocks or bonds held by the fund. Daily ups and downs in NAV are completely normal, reflecting short-term market movements rather than long-term returns.
Is checking NAV daily beneficial?
The short answer is ‘No’. Mutual fund investments are primarily aimed at long-term wealth creation, not daily trading.
In equity mutual funds, NAV fluctuations mirror the stock market’s daily movements. If your investment horizon is 5–10 years, small day-to-day changes in NAV do not materially affect your long-term goals.
Daily tracking can lead to unnecessary stress
Constantly checking NAV and fund values can lead to unnecessary stress and emotional reactions. Rising NAVs may create excitement, while dips can lead to anxiety. Emotional reactions often lead to poor decisions, such as selling funds prematurely or frequently switching between funds.
Such behaviour can undermine long-term gains, as it reduces the benefits of compounding and market recoveries. For instance, when NAVs fall, you can buy more units at a lower price, enhancing potential gains during market recovery. Exiting the fund in panic means missing this opportunity.
A smarter approach: Review every 3–6 months
Instead of daily monitoring, consider reviewing your mutual fund performance every 3–6 months. During these reviews compare your fund’s returns with its benchmark and similar funds in the same category. Check whether the fund is performing in line with your investment goals.
Keep your investment objective in mind
If you are investing for your child’s education 10 years from now, short-term NAV drops are not a cause for concern. A Systematic Investment Plan (SIP) ensures regular investing, helps navigate market volatility, and benefits from Rupee Cost Averaging, which balances your average investment cost.
Even if you invest in debt or liquid funds, daily tracking is unnecessary. Monthly performance checks are sufficient.
Patience is the key
Checking NAV daily is like weighing yourself after every meal—results are only meaningful over time. The true secret to success in mutual fund investing is staying invested consistently.
Investors who maintain their SIP discipline avoid being distracted by daily NAV fluctuations are the ones who achieve meaningful wealth creation over the long term.
Disclaimer: Mutual fund investments are subject to market risks. Past performance does not guarantee future returns. Investors should consider their financial goals, risk appetite, and investment horizon before investing.
Note: This content has been translated using AI. It has also been reviewed by FE Editors for accuracy.