Part of the guide: Mutual funds and SIPs in India: NAV, expense ratio, direct vs regular and other terms explained
Personal financeWhat is NAV in a mutual fund? How net asset value is calculated
NAV is the value of one unit of a mutual fund. How it is calculated, what a high or low NAV does and does not mean, and how many units an amount buys, with illustrative numbers.
NAV, or net asset value, is the value of one unit of a mutual fund. It is worked out at the end of each trading day.
The calculation
NAV = (value of the fund’s assets − its liabilities) ÷ number of units outstanding.
For a hypothetical fund, in ₹ crore:
| Amount | |
|---|---|
| Value of holdings and cash | 1,000 |
| Liabilities (expenses due and so on) | 10 |
| Net assets | 990 |
| Units outstanding | 99 crore |
| NAV per unit | ₹10 |
What NAV is used for
When you invest, you buy units at the NAV of the day your money is accepted, less any cost stated in the scheme documents. When you redeem, you sell units at the NAV of the redemption day. So ₹10,000 at a NAV of ₹10 buys 1,000 units.
What NAV does not tell you
- A low NAV is not cheap and a high NAV is not expensive. NAV is a per-unit value that depends on when the fund was launched and how many units exist. Two funds with the same holdings can have different NAVs.
- Change in NAV matters, not its level. What has happened between two dates is measured by the percentage change, adjusted for any payouts.
- Costs are already in it. The fund’s yearly expenses are deducted from its assets, which reduces the NAV a little each day. See the cost you do not see.
Where to find it
The NAV of every fund is published daily, on the fund house’s website and on the AMFI website. The wider set of terms is in mutual funds and SIPs explained. Returns are not guaranteed and NAV can fall as well as rise.