Net Asset Value (NAV)

Net Asset Value for a mutual fund is the market value per share of the stocks included in the fund.

NAV or Net Asset Value tells investors what is the per unit price of a mutual fund scheme. Investors can therefore buy/sell mutual funds units as per the NAV. NAV is calculated on a daily basis as per the closing price of all the securities included in the mutual fund scheme. Thus, it can change everyday.

How is mutual fund NAV calculated?

NAV per unit = Market value of securities in the fund/number of units issued

For example-

Suppose the market value of the securities included in a mutual fund scheme is Rs. 500 lakhs. If the fund house issues 10 lakh mutual fund units, the per unit NAV will be Rs. 50.

How is NAV important for investors?

Investors must consider NAV while investing in a mutual fund but this should not be the only deciding factor. For example, it may not be sensible to select a mutual fund scheme only because it has a lower Net Asset Value. NAV is in no way an indication of the mutual fund’s future performane. It is only a price at which an investor can buy or redeem units of the mutual fund scheme.