What is NAV in Futual Fund

What is NAV in Mutual Fund? 

Net asset value or NAV refers to the total market value of all the securities held by a fund divided by its number of outstanding shares. In other words, it’s how much each share would be worth if you sold them on the open market at their current prices. 

This article covers: 

NAV stands for “Net Asset Value.” It is the per-share value of the mutual fund’s assets minus its liabilities. In other words, it represents the price at which you can buy or sell one unit of the mutual fund.

NAV is calculated by taking the total value of all the assets in the mutual fund, subtracting any liabilities, and dividing the result by the number of outstanding shares in the fund. The calculation is usually done at the end of each trading day.

Investors can use NAV as an indicator of the mutual fund’s performance. However, it is important to keep in mind that the NAV does not necessarily reflect the return on investment, as mutual funds also generate returns through dividends, capital gains, and other means.

Suppose a mutual fund has total assets worth Rs. 10 lakh, liabilities of Rs. 1 lakh, and expenses of Rs. 50,000. If there are 1,00,000 outstanding units, then the NAV would be calculated as follows:

NAV = [10,00,000 – (1,00,000 + 50,000)] / 1,00,000

= [9,00,000] / 1,00,000

= Rs. 9

So, for every unit of this mutual fund, the NAV is Rs. 9. If an investor invests Rs. 9,000 in this mutual fund, he will get 1,000 units of the mutual fund.

What is NAV in SIP?

In a SIP, the NAV is used to calculate the number of units that an investor will receive for the invested amount. For example, if the NAV of a mutual fund scheme is Rs. 50 and an individual invests Rs. 500 per month through a SIP, they would receive 10 units of the mutual fund scheme every month. Over time, as the NAV of the mutual fund scheme fluctuates, the number of units an individual receives will also change.

When it comes to Systematic Investment Plans (SIPs), NAV plays a vital role in determining the investment amount and returns. SIP is a popular investment method where individuals invest a fixed amount of money at a fixed frequency (usually monthly) into a mutual fund scheme. 

How to calculate NAV of mutual fund with example – NAV Formula

Here are the steps to calculate the NAV (Net Asset Value) of a mutual fund:

Step 1: Determine the value of the mutual fund’s assets. The value of a mutual fund’s assets includes cash, stocks, bonds, and other securities held in the fund’s portfolio.

Step 2: Deduct the mutual fund’s liabilities. The mutual fund’s liabilities include any outstanding debts, such as loans or expenses incurred in managing the fund.

Step 3: Divide the net value of the assets by the number of outstanding units. The net value of the assets is the value of the assets minus the liabilities. Divide this number by the total number of outstanding units of the mutual fund to get the NAV per unit.

Step 4: Repeat the calculation every day. The NAV of a mutual fund is calculated daily after market hours.

The Net Asset Value (NAV) of a mutual fund can be calculated by using the following formula:

NAV = [Total Value of Assets – (Liabilities + Expenses)] / Number of Outstanding Units


  • Total Value of Assets: The sum of the value of all the securities and liquid cash held in the mutual fund’s portfolio.
  • Liabilities: Any debts or obligations of the mutual fund.
  • Expenses: Any costs associated with managing the mutual fund.

Role of NAV in the Performance of a Fund

Net asset value provides investors with insight into how well their money is performing relative to similar funds available on the market today. By comparing various funds’ NAVs over time, investors can get an idea as to which ones may offer better returns than others. 

Knowing your fund’s net asset value gives you greater control over your portfolio because you have access to up-to-date pricing information regarding individual stocks and other holdings within your chosen mutual fund(s). This allows you to make timely adjustments if needed without having to wait until after markets close before making any trades/investments. 

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What is NAV in Mutual Fund- Quick Summary

  • Net asset value is defined as the total market value of all assets in a portfolio divided by the number of shares outstanding. It represents what each share would be worth if all assets were sold at current prices and liabilities paid off immediately. 
  • The higher NAV generally means that more money has been invested into it than withdrawn from it over time; conversely, lower values indicate less investment activity overall.
  • The indicator to check the value of a mutual fund is NAV (Net asset value). 
  • Different types of funds may have different NAVs, which can change frequently.
  • Knowing what net asset value means in regards to mutual funds is essential for anyone looking to invest wisely & maximize profits while mitigating potential losses through careful management & analysis. 
  • Make sure to check the NAV of a mutual fund along with other parameters such as the objective of the fund, expense ratio, experience of the fund managers, etc. 

What is NAV in Mutual Fund- Frequently Asked Questions

1. Is higher NAV better or lower?

The NAV (Net Asset Value) of a mutual fund represents the per-unit market value of the fund’s underlying assets, so a higher NAV means each unit is worth more. However, a higher NAV does not necessarily indicate that the mutual fund is better or will provide better returns. Other factors, such as the fund manager’s expertise, expense ratio, and past performance, are more important in determining the potential returns of a mutual fund. 

2. How much NAV is good in a mutual fund?

The NAV (Net Asset Value) of a mutual fund does not determine its quality or performance. It only represents the per-unit value of the assets held by the mutual fund. A high or low NAV does not guarantee better or worse returns. The factors that influence the performance of a mutual fund include the fund manager’s investment strategy, market conditions, fund expenses, and others. 

The best way to determine if a mutual fund is suitable for your investment goals is to consider its past performance, risk tolerance, fees, and other relevant factors rather than just its NAV.

3. What is a good price for NAV?

There is no specific “good price” in relation to NAV, as the value of a mutual fund is determined by many factors beyond just the NAV. The NAV of a mutual fund is just one aspect to consider when evaluating a mutual fund’s value. 

Other factors to consider include the fund’s past performance, its portfolio of investments, the quality of the fund’s management, the fees charged, and the investment objectives and strategy of the fund. Ultimately, what is considered a “good price” depends on an investor’s individual investment goals, risk tolerance, and other financial factors.

4. What happens when NAV increases?

When the net asset value (NAV) of a mutual fund increases, it means that the market value of the assets of the fund has gone up, while the value of its liabilities has stayed the same or gone down. An increase in NAV indicates that the fund is performing well, as its securities have appreciated in value. 

This, in turn, makes the fund more attractive to investors and may lead to an increase in demand for the fund’s shares. 

5. At what time NAV is calculated?

The NAV (Net Asset Value) of a mutual fund is calculated at the end of each market day. The market value of securities held by the fund can change on a daily basis, so the NAV is calculated daily to reflect these changes.

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