New Delhi, Sept. 29 -- There is something naturally attention-grabbing about a new launch. It happens with phones, cars, restaurants. Mutual funds are not entirely immune to it either. A New Fund Offer, or NFO, arrives with a launch period and a new scheme. Units are commonly offered at Rs.10 each during this period. An existing mutual fund may meanwhile have an NAV of Rs.40, Rs.80 or Rs.150.

Rs.10 looks cheaper, doesn't it? It isn't, at least not in the usual sense of the word. Let's understand this better.

NAV represents the per-unit value of a mutual fund scheme. A higher NAV does not by itself make one fund more expensive than another, and the Rs.10 attached to an NFO is simply the price at which its units are initially offered.

So...