NAV

Net Asset Value (NAV) is the per-unit market value of a Mutual Fund scheme. It represents the price at which investors buy (subscribe) or sell (redeem) mutual fund units. NAV is calculated at the end of each business day after the market closes.

The formula is straightforward: NAV = (Total Assets − Total Liabilities) / Number of Outstanding Units. Total assets include the market value of all securities in the portfolio plus any accrued income (dividends, interest) and cash holdings. Liabilities include fees payable, pending redemptions, and other obligations.

For example, if a fund holds stocks worth ₹500 crore, bonds worth ₹100 crore, has ₹10 crore in cash, owes ₹2 crore in expenses, and has 50 crore units outstanding: NAV = (500 + 100 + 10 − 2) / 50 = ₹12.16 per unit.

A common misconception among Indian investors is that a fund with a lower NAV is "cheaper" and therefore a better buy. This is incorrect. NAV is simply a reflection of the fund's accumulated past performance. A fund with NAV ₹500 is not more expensive than one with NAV ₹15 — what matters is the future growth rate. If both funds hold similar portfolios, their percentage returns will be identical regardless of NAV level.

In India, AMCs are required by SEBI to publish NAVs by 11:00 PM on each business day on their websites and on the AMFI website (amfiindia.com). For equity and hybrid funds, the NAV applicable for a purchase/redemption depends on the time of application: if the application with valid payment is received before the cut-off time (3:00 PM for equity funds, 1:30 PM for debt funds), the same day's NAV applies. After the cut-off, the next business day's NAV applies.

When calculating returns on your mutual fund investment, always use the NAV at purchase and the NAV at sale/current date. If you invested ₹1,00,000 at NAV ₹25 (4,000 units) and the current NAV is ₹32, your investment is worth ₹1,28,000 — a 28% return.