NAV

Full form: Net Asset Value

Investments

NAV is the per-unit price of a mutual fund, calculated daily. It represents the fund's total assets minus liabilities divided by units outstanding. Transactions happen at the applicable NAV. A higher NAV does not mean an expensive fund -- it simply means the fund has been around longer.

In detail

NAV is calculated every business day after market hours. Equity fund NAV changes daily based on underlying stock performance. Liquid fund NAV changes daily very slightly (daily interest accrual).nnCut-off time: Equity funds -- orders before 3 PM get that day's NAV. Liquid funds -- orders before 2 PM get that day's NAV.nnCommon misconception: A new fund with Rs 10 NAV is not cheaper than a fund at Rs 200 NAV. If both grow at the same rate, returns are identical. NAV level is irrelevant -- only percentage change matters.

Formula

NAV = (Total Market Value of Assets - Liabilities) / Total Units Outstanding Units allotted = Investment amount / NAV on transaction day Return = (Redemption NAV - Purchase NAV) / Purchase NAV x 100

Real-life example

🇮🇳 India example

You invest Rs 50,000 at NAV Rs 100. Units allotted: 500. Three years later NAV is Rs 150. Investment value: 500 x 150 = Rs 75,000. Gain: Rs 25,000. Return: 50%. CAGR: 14.5% per year. The NAV level (Rs 100 vs Rs 150) was entirely irrelevant -- only the percentage change mattered.

Frequently asked questions

Should I invest in a mutual fund with low NAV? ▼
No. A new NFO with Rs 10 NAV is not cheaper than an existing fund at Rs 200 NAV. If both grow at the same rate, you get identical returns. A low NAV fund simply has not been around as long -- it has no return history to evaluate. Prefer funds with at least 5-year track records over new fund offers.