Definition of Face Value
The face value (or par value) of a mutual fund unit is the original denomination at which units are issued, typically ₹10. Face value is a historical or accounting concept and has little practical significance for investors — do not confuse it with NAV.
In stocks, face value is the value printed on the share certificate (e.g., ₹1, ₹2, ₹10). A stock split reduces the face value and proportionally increases the number of shares (your total holding value remains the same). Similarly, a mutual fund with NAV ₹500 after years of growth has ₹10 face value — it's just grown significantly from its starting NAV.
The confusion between face value and NAV often leads new investors to incorrectly believe that funds with lower NAV (closer to face value) are 'cheaper' or 'better value.' This is false — NAV reflects the actual market value of the fund's portfolio, and no comparison can be made between two funds based on NAV alone without considering the underlying portfolio and historical performance.