NAV
InvestmentNet Asset Value
The per-unit price of a mutual fund, calculated by dividing the total net assets of the fund by the number of units outstanding.
Definition
Net Asset Value (NAV) is the per-unit price of a mutual fund scheme. It represents the current market value of all the assets held by the fund minus its liabilities, divided by the total number of units outstanding.
NAV is the price at which investors buy (subscribe) and sell (redeem) units of a mutual fund. It is updated and published daily by all AMFI-registered fund houses after the market closes, ensuring transparency in pricing.
NAV is not a measure of a fund's quality or performance potential — it simply reflects the current market value of the fund's holdings per unit. Comparing two funds by their NAV alone is meaningless.
Formula
NAV = (Total Assets − Total Liabilities) / Number of Units Outstanding
Where:
- Total Assets = Market value of all securities (equity, debt, cash) held by the fund
- Total Liabilities = Accrued expenses, fees payable, and other obligations
- Number of Units Outstanding = Total units held by all investors in that scheme
Worked Example
A mutual fund holds:
- Equity portfolio market value: ₹95 crore
- Cash and equivalents: ₹3 crore
- Accrued liabilities: ₹1 crore
- Total units outstanding: 50 lakh
NAV = (₹95 crore + ₹3 crore − ₹1 crore) / 50,00,000 = ₹97 crore / 50,00,000 = ₹194
An investor redeeming 100 units would receive 100 × ₹194 = ₹19,400 (before exit load if applicable).
Key Things to Know
- NAV vs stock price: A stock price reflects supply and demand for the company's shares. NAV is purely mathematical — it changes only because the underlying securities' prices change, not because of buy/sell pressure on the fund itself.
- ELSS lock-in by NAV date: In ELSS funds, the 3-year lock-in is calculated from the date of allotment (when NAV was assigned), not from the date of transaction initiation.
- Expense ratio impact: The NAV already reflects the deduction of the fund's expense ratio on a daily basis. A fund with a lower expense ratio will have a higher NAV over time, all else equal.
- Direct vs regular NAV: Direct plans (no distributor) have a higher NAV than regular plans for the same scheme because they have lower expenses. This difference compounds significantly over long periods.
- SIP and NAV: In a SIP, you invest a fixed rupee amount each month. The number of units you get varies with the NAV on the transaction date — you get more units when NAV is low and fewer when NAV is high, achieving rupee cost averaging.