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What is NAV (Net Asset Value) of a mutual fund
NAV is the per-unit price of a mutual fund, calculated as the fund's total assets minus liabilities divided by the number of units outstanding. A higher NAV does not mean a fund is expensive or a lower NAV cheap.
In one line
NAV (Net Asset Value) equals the fund's total assets minus its liabilities divided by the total number of units outstanding, so if a fund holds assets worth 10 crore rupees, has 50 lakh rupees in liabilities, and has issued 50 lakh units, each unit has a NAV of 19 rupees, and this number changes every business day as the underlying portfolio rises or falls.
BazaarBaaziSource & method
How NAV is computed and updated
Every business day, after market close, the AMC (asset management company) values the fund's portfolio at the closing prices of every security it holds. It adds up the market value of all holdings, adds any cash or receivables, and subtracts liabilities such as management fees payable. Dividing that net figure by the total units issued gives the NAV for that day. This is the price at which you buy or redeem units on that day's cut-off.
NAV is not a market price you can trade at any minute. When you place a purchase request before the cut-off time (typically 3 PM for equity funds), you get units at that day's NAV, which is only known after market close. Submit after cut-off and you get the next day's NAV. This is why equity mutual funds are not the same as ETFs, where prices change tick by tick during the session.
The NAV myth: high NAV does not mean expensive
This is one of the most common mistakes Indian retail investors make. A fund with a NAV of 2,000 rupees is not more expensive or less likely to grow than one with a NAV of 50 rupees. NAV only reflects the cumulative growth of the fund since it launched. A fund that started at 10 rupees and has grown to 2,000 over 20 years is a sign of compounding, not a signal to avoid it.
What matters is not the NAV level but the quality of the fund manager, the portfolio, the expense ratio, and the long-run return track record. Choosing a fund with a low NAV over a good fund with a high NAV is like choosing a stock because it is a cheaper price per share, ignoring the business behind it. The rupees you invest in any fund buy the exact percentage of the portfolio your money entitles you to, regardless of where the NAV number sits.
FAQ3 reader questions · AEO-eligible
Common questions on what is nav.
What is the NAV of a mutual fund?
NAV is the per-unit value of a mutual fund, calculated as the fund's total assets minus liabilities divided by the number of units outstanding. It is declared every business day after market close.
Is a higher NAV bad for a mutual fund?
No. A higher NAV simply means the fund has been running longer or has compounded more. It says nothing about future returns. Comparing two funds by NAV level alone is not meaningful.
When should I buy a mutual fund by NAV?
For a regular equity mutual fund you buy at the NAV of the day your purchase request is processed, not at a live tick price. You cannot time the NAV within a day the way you can time a stock trade.
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