Three Mutual Fund Myths That Refuse to Die
Myth: Mutual funds are only for people who don’t understand the stock market.
Reality: Mutual funds exist because professional fund management, diversification, and disciplined allocation take time and expertise most investors, however capable, don’t have alongside a full-time career. A surgeon or a business owner skipping mutual funds to pick individual stocks isn’t showing sophistication, just spending scarce time on a task better delegated. The people who benefit most from direct stock-picking are usually those doing it full-time, not as a side activity between other commitments.
Myth: A fund with a higher NAV is expensive, and a lower NAV means more room to grow.
Reality: NAV is simply the current price of one unit, not a measure of value or growth potential. A fund with an NAV of ₹800 and one with an NAV of ₹80 can deliver identical percentage returns from that point forward if their underlying portfolios perform the same way. What actually determines future returns is the quality of the fund’s holdings and strategy, not the number printed next to today’s price. Investors at Ashutosh Financial Services are routinely walked through this distinction, because the NAV confusion is one of the more persistent misunderstandings in the room.
Myth: SIPs guarantee profits because they average out the cost over time.
Reality: Rupee cost averaging is a real mechanic. Buying more units when prices are low and fewer when prices are high does smooth the average purchase cost compared to a lump sum badly timed. But it doesn’t guarantee a positive return, since a fund that’s fallen and stays down will still show a loss regardless of how disciplined the SIP was. What SIPs reliably deliver is behavioural discipline, not immunity from market risk, and conflating the two leads to disappointment when a bad market cycle actually shows up.
None of these myths are exotic. They’re the kind of half-truths that circulate because they sound intuitive, not because anyone checked them. Ashutosh Financial Services keeps running its investor awareness sessions specifically to chip away at this gap between what sounds true and what actually holds up.
