NAV of a Mutual Fund

NAV means the Net Asset Value of a mutual fund. It is arrived at by subtracting the liabilities and expenses of the fund from the value of its assets. When divided by the number of outstanding shares in the fund, NAV stands for the average price per share. For example, if a fund’s assets are valued at Rs.3 crore and it has liabilities of Rs.58 lakh, then the net book value of the fund would be Rs.2.42 crore. If there are 5 lakh outstanding shares in the fund on a given day, then the NAV for the day would be Rs.48.4.

So, to put it in a formula: NAV of a mutual fund = (Value of assets – value of liabilities)/Number of outstanding units or shares

This NAV could change on a day-to-day basis depending on the change in assets and liabilities, the number of shares, and the price of the shares in the market. For this reason, NAVs are published by most mutual funds at the end of the day, after the market closes. Fund managers need time to calculate the values of the fund’s shares based on the rates at the time of market closure.

NAV Versus Returns

The NAV is not a key criterion to gauge the performance of a fund; it is merely an indicative number of the value of the fund. However, it is an important number for investors because it tells you how much money you may make per share if you sold at the current rate. It also helps calculate the amount you’d need to invest in that particular fund. In the above example, if you were investing Rs.2 lakh, you will get approximately 4,132 shares of the mutual fund. On the other hand, if you own 5,000 shares of the fund and want to sell it on the given day, you will get Rs.2.42 lakh.

The NAV by itself cannot tell you the total value of the fund unless you know the number of units it has. If Fund A has an NAV of Rs.212 and Fund B has an NAV of Rs.98, it does not mean that one is cheaper or more profitable than the other. The total value of the fund will be NAV multiplied by the number of outstanding shares. So, if Fund A has only 8,000 shares, then its value would be Rs.16.96 lakh, and Fund B with 19,000 shares would be valued at Rs.18.62 lakh. When you intend to buy mutual fund units, with Rs.2 lakh, you will get 943 units of Fund A and 2,041 units of Fund B. But, it is possible that the returns on Fund A are better than in Fund B, in which case you could make greater profit on Fund A even if it has a higher NAV.

There are often misconceptions that less NAV could mean low profits or vice versa, but if you need to know how much profit you would make on the mutual fund, you need to look at the returns of the fund. The higher the returns, the greater your gains. These returns may differ from month to month depending on the market trends. It also depends on the kind of mutual fund you hold – debt funds, for instance, may give you lower returns in the short-term than a moderate to high risk equity fund.

NAV of a Mutual Fund FAQs

  1. Will I get better returns if I invest in a mutual fund with a low NAV?
  2. The Net Asset Value or NAV of a mutual fund does not necessarily indicate its performance. Hence, investors should not consider the NAV of a scheme alone to determine whether they should purchase the units of a fund or not.

  3. What is the difference between NAV and market price?
  4. A mutual fund should be enlisted under a stock exchange in order to allow investors to purchase or subscribe for its shares. The market price of a share is decided by the stock exchange factoring in multiple aspects such as the demand-supply condition, the company fundamentals, and the expected performance of the company.

  5. Does the timing of my investment impact the NAV?
  6. Yes, investment timings play a key role in determining the NAV that will be applicable. Mutual funds generally have a deadline of 2:00 p.m. for making an investment. If an investment is made before that, the NAV for the same day will be applicable. In case an investment is made after this deadline, the units will be alloted based on the NAV of the next business day.


Mutual Fund investments will be subject to market risks. Any mutual fund listed in the document does not guarantee fund performance or its underlying creditworthiness. Do read the mutual fund document thoroughly before investing. Specific investment needs and other factors have to be taken into account while designing a mutual fund portfolio.

GST rate of 18% applicable for all financial services effective July 1, 2017.

Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. Display of such IP along with the related product information does not imply BankBazaar's partnership with the owner of the Intellectual Property or issuer/manufacturer of such products.

This Page is BLOCKED as it is using Iframes.