The value of a mutual fund represents its price per share. The Net Asset Value (NAV) is calculated in dollars and the value per share is derived by dividing the total value of all assets in the portfolio minus liabilities by the outstanding number of fund shares. NAV assists in setting the price per unit of a mutual fund. Outstanding shares are shares that are owned by the shareholders.
The NAV of a fund will change during a particular trading day and the price of stocks, bonds, precious metals and commodities will fluctuate. The final NAV will be determined based on the market price of the asset at the end of the trading day. For some mutual funds, the Net Asset Value is determined multiple times during a trading day.
SEBI has laid down various rules and guidelines to Asset Management Companies (AMCs) for the valuation of various mutual fund assets. These are briefly explained below:
In case this security has not been traded for a period more than 30 days, then the Net Worth per share will be calculated as follows: [Share Capital + Reserves (Except revaluation reserves) - Miscellaneous expenditure and Debit Balance in P&L Account] / Number of Paid-up Shares.
The average capitalization rate for the fund, which is based on NSE or BSE information, will be discounted by 75% in order to calculate the P/E Ratio. In order to arrive at fair value per share, a 10% discount for illiquidity is applied to the average of net worth value per share and capital earning value.
The last traded price will be taken into consideration for valuation of an equity that has been suspended for not more than 30 days. The fair valuation guidelines applicable for thinly traded securities will be applicable for valuation of equity security that has been suspended for a period above 30 days.
The valuation method for unlisted equity shares of an organization is based on the audited balance sheet which is available within nine months of the year end. Net worth per share is calculated as follows:
[Share Capital + Free Reserves (Except revaluation reserves) - Miscellaneous expenditure] / Number of Paid-up Shares.
Or
Share Capital + Consideration on exercise of Warrants/Options receivable/received by the company + Free Reserves (Except revaluation reserves) - Miscellaneous expenditure and Debit Balance in P&L Account] / Number of Paid-up Shares; whichever is the lowest.
The calculation will be based on audited accounts only. If the EPS is a negative value, then it will be considered as zero for that year, while calculating the capitalized earning.
Illiquid securities are thinly traded, unlisted and non-traded equity shares. The aggregate value of these shares should not be more than 15% of the total assets available in the mutual fund scheme. If the aggregate value of illiquid securities is more than 15% of the total assets, then the value assigned is zero.
Equity Shares that are allotted through the Qualified Institutional Placement process is valuated in a manner similar to the valuation of listed equity shares. This means that the calculation is based on the price fixed on listed equity shares in a trading day.
Traded securities will be valued at the price quoted at the end of a trading day. The primary stock exchange that is taken into consideration is the BSE and the secondary stock exchange that will be considered for all mutual fund schemes except SBI Nifty Index Fund is National Stock Exchange (NSE). Non-traded non-convertible preference shares are valued based on the same method of calculation as non-convertible debentures and bonds under the Debt Security segment. Non Traded convertible preference shares are valued based on the guidelines set for equity valuation.
Maximum Mark Up (Bps) | Maximum Mark Down (Bps) | |
Securities less than or equal to 365 days | 150 | -50 |
Securities greater than 365 days | 75 | -25 |
Under the Gold Exchange Traded Funds, the value of gold is determined based on the AM fixing price set by the London Bullion Market Association (LBMA). The value is calculated in US Dollars and it is calculated per troy ounce of gold having purity of 995.0 parts per 1000. It is subject to the following conditions:
GST rate of 18% applicable for all financial services effective July 1, 2017.
Credit Card:
Credit Score:
Personal Loan:
Home Loan:
Fixed Deposit:
Copyright © 2025 BankBazaar.com.