What is NAV in a mutual fund?
Key facts
- NAV is the fund's assets minus liabilities, divided by the total number of units.
- It is declared once per business day, after the markets close.
- You transact at the applicable NAV based on cut-off timing and realisation of funds.
- A low NAV does not mean a fund is cheaper or better; it is not like a share price.
The per-unit price
NAV, short for Net Asset Value, is simply the price of one unit of a mutual fund. It is the fund's total assets minus its liabilities, divided by the number of units outstanding. If a fund's holdings are worth more today, its NAV is higher; if they fall, the NAV falls.
Unlike a share, whose price ticks through the day, a fund's NAV is struck once per business day, after the market closes, using that day's closing values.
The myth worth killing
A lot of poor decisions come from thinking a low NAV means a cheap fund. It does not. A fund at ₹10 is not on sale next to one at ₹100. What grows your money is the percentage change in the portfolio, and that applies equally whatever the starting NAV. Buying a fund because its NAV "looks low" is buying for the wrong reason.
Which day's NAV you get
The NAV you actually transact at depends on when your order and money reach the fund, which is governed by cut-off timing and realisation of funds. If any of this is unclear for a transaction you are about to make, talk to us.
Frequently asked questions
How is NAV calculated?
NAV is the fund's total assets minus its liabilities, divided by the number of outstanding units. It is computed once each business day after markets close, so every investor transacting that day at the applicable NAV gets the same price.
Is a fund with a lower NAV cheaper?
No. This is a common misunderstanding. A ₹10 NAV is not a discount versus a ₹100 NAV. What matters is how the underlying portfolio performs in percentage terms, which affects both equally. The absolute NAV number is not a measure of value.
How often does NAV change?
Once every business day. Unlike a share price that moves through the trading day, a mutual fund's NAV is struck once, after the market closes, based on that day's closing values of its holdings.
This is general information, not a recommendation for your situation. If it would help to talk it through, we are happy to. Talk to Nico Wealth.
The information on this website is general and educational. It is not financial, tax, or legal advice, and not a recommendation for your situation. We try to keep it accurate and up to date, but it may contain errors or become outdated. Please verify important details from official sources, and consider your own circumstances, before acting.
Sources
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