What Is Net Asset Value (NAV) in Mutual Funds

Discover the ins and outs of how NAV works, and gain a deeper understanding of how it impacts your investment returns in mutual funds.
Net Asset Value (NAV)
3 mins
17 Feb 2024

The Mutual Fund's scheme performance is indicated by its Net Asset Value (NAV), representing the market value of its held securities. Funds invest investors' money in securities markets, and as the market value of securities fluctuates daily, so does the scheme's NAV. Calculated as the market value of securities divided by the total number of scheme units, the NAV per unit determines the value of each unit on any given date.

What is NAV?

Net Asset Value (NAV) is a fundamental metric used to assess the value of a mutual fund. It represents the per-unit value of the fund's assets after deducting any liabilities. Essentially, NAV indicates the price at which investors buy or redeem mutual fund units.

How NAV Works

NAV is calculated at the end of each trading day. The formula is simple: divide the total value of the fund's assets by the total number of outstanding units. This calculation takes into account the market value of the mutual fund's holdings, including stocks, bonds, and other securities, as well as any accrued income and expenses.

What is the NAV for Mutual Funds?

When you invest in a mutual fund, you are essentially buying units of the fund. The price that you pay for each unit is the NAV of the fund.

For example, if the NAV of a mutual fund is Rs. 100, you will pay Rs. 100 for each unit of the fund.

The NAV of a mutual fund is important for mutual fund investors because it determines how much money you will get when you sell your units. If you sell your units when the NAV is higher than the price you paid for them, you will make a profit. Conversely, if you sell your units when the NAV is lower than the price you paid for them, you will make a loss.

Frequently asked questions

Is a higher or lower NAV better?

A lower NAV can be better when buying mutual fund units because you get more units for your investment. However, the performance depends on the fund's returns, not just NAV.

How to check NAV of a mutual fund?

You can check a mutual fund's NAV in financial websites like Bajaj Finserv Platofrm, or directly from the asset management company. It's updated daily.

What affects the NAV of a mutual fund?

NAV is affected by the fund's underlying asset values, expenses, income, and changes in the number of outstanding units. Market fluctuations and fund performance also play a role.

Should you invest in an MF with a high NAV?

A mutual fund's NAV alone doesn't determine its suitability. Consider factors like investment goals, risk tolerance, and past performance. A high NAV doesn't necessarily mean a better fund; it depends on other factors too.

What does NAV mean in simple words?

NAV, or Net Asset Value, represents the per-unit value of a mutual fund, determined by dividing the total value of all its assets by the number of outstanding units.

What is the new rule on applicable NAV?

According to the recent regulation introduced on February 1, 2021, AMC will allocate mutual fund units on the same day if the payment is settled in the bank account within the specified cut-off time. This regulation is applicable to all mutual fund schemes, irrespective of the invested amount.

Who calculates NAV?

NAV is calculated by mutual fund companies or AMC.

Is NAV calculated daily?

Yes, NAV is calculated daily at the end of each trading day, reflecting the current value of the mutual fund's assets and liabilities.

What does NAV Mean in finance?

In finance, NAV stands for Net Asset Value, indicating the per-share value of a mutual fund or ETF after deducting its liabilities from the total value of assets.

Where do you find the Net Asset Value per share of a mutual fund?

The Net Asset Value per share of a mutual fund can typically be found on the fund company's website and financial websites.

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