Why your mutual fund shows a loss the day after you invested

You put ₹10,000 into a mutual fund on Monday. Tuesday morning you open Groww, and the app tells you your investment is worth ₹9,940. You haven’t done anything wrong. The market didn’t crash. But somehow, you’re already down ₹60.

Here’s what actually happened.

The Price You Pay Is Not the Price You See

When you invest in a mutual fund, you’re buying units at something called the NAV — Net Asset Value. Think of it as the price of one unit of the fund, calculated at the end of every trading day.

The catch is that when you place your order on Monday, you get Monday’s closing NAV — not the price you saw when you clicked “invest.” By the time that NAV is calculated (usually after 3:30 PM), the market has moved. If markets dipped even slightly in the last hour of trading, the NAV you get is lower than the one you saw when you were browsing.

So you bought at ₹150 per unit thinking you’d get 66.67 units for your ₹10,000. But the final NAV came in at ₹150.50 — and now you’ve got fewer units. That’s already a small gap between what you expected and what you got.

The Expense Ratio Bites From Day One

Here’s the one most people miss. Every mutual fund charges something called an expense ratio — it’s the annual fee the fund house takes to manage your money, deducted daily from the fund’s value.

A regular plan on a platform like your bank’s app might carry an expense ratio of 1.5% to 2% per year. A direct plan on Kuvera or Groww might charge 0.5% to 1%. The difference sounds small, but it’s built into the NAV you receive every single day — including day one.

If you put ₹10,000 into a regular plan with a 1.8% expense ratio, roughly ₹0.49 is being deducted on day one just as the fund’s cost of doing business. That’s not a loss you caused. It’s the cost of entry. But it shows up immediately.

Exit Loads Are the Other Silent Hit

Some funds — especially equity funds — charge an exit load, which is a small penalty for selling too soon. SEBI allows funds to charge up to 1% if you redeem within one year.

Say you invest ₹10,000 in an HDFC Mid Cap Opportunities Fund. If you got nervous and sold on day two, the fund would deduct 1% of your redemption value before sending money back to you. That’s ₹100 gone, not because markets fell, but because you left before the fund wanted you to.

Even though you’re not selling, the existence of that exit load means your “realisable value” — what you’d actually get if you withdrew right now — is lower than your invested amount. Some platforms show this realisable value by default, which is why the number looks red.

So Why Does the App Show a “Loss”?

Most apps like Groww and Zerodha show your current value vs. your invested amount. On day one, your current value includes:

• The NAV you actually received (which might differ from what you saw)
• The expense ratio already at work
• The exit load factored into realisable value

Put these together and on ₹10,000 invested in, say, an SBI Bluechip Fund regular plan, you might see your portfolio valued at ₹9,920 to ₹9,960 the very next morning. Nothing is broken. You haven’t made a bad decision.

The real number to watch isn’t day-two value. It’s XIRR after 3 to 5 years — that’s the actual annualised return on your investment, accounting for exactly when money went in and came out. Everything before that is noise.

What You Should Actually Do

Switch to a direct plan if you haven’t already. On Kuvera or Coin by Zerodha, you invest in the direct version of any fund — the expense ratio is lower, no distributor commission is eating into your returns, and the NAV compounds faster over time. On a ₹5,000 monthly SIP over 20 years, the difference between a regular and direct plan can easily be ₹3 to ₹5 lakhs in final corpus.

Don’t check your portfolio every day. Seriously. Set up your SIP, check in once a quarter, and let it run. Day-one numbers tell you nothing about whether you’ve made a good investment.

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Frequently Asked Questions

Why is my mutual fund in the red even though the market went up today?

Your NAV is calculated at market close, not in real time. If you invested earlier in the day and the market rose after your order was processed, your NAV was locked before that rise — so you missed it. Also, the expense ratio is deducted daily, which slightly lowers the NAV regardless of market movement.

Is it normal to see a negative return on day one of a mutual fund?

Completely normal. The combination of NAV cutoff timing, expense ratio deduction, and exit load reflected in realisable value almost always means your day-one display value is slightly below your invested amount. It doesn’t mean the fund is performing badly.

What is the difference between direct and regular mutual fund plans?

A direct plan cuts out the distributor and lets you invest straight with the fund house through platforms like Kuvera or Groww. The expense ratio is lower — often by 0.5% to 1% annually. Over time, that difference compounds significantly in your favour.

Should I stop my SIP if my portfolio shows a loss?

No. A short-term loss display, especially in the first few weeks, is mostly noise — timing differences and fees, not a signal about your fund’s quality. SIPs are designed to average out over market cycles. Stopping early defeats the purpose entirely.

How do I know what exit load my fund charges?

Check the fund’s Scheme Information Document (SID) on the AMC’s website, or look it up on Value Research or Moneycontrol. Most equity funds charge 1% if you exit within 12 months; debt and liquid funds often have no exit load after a few days.