What is NAV?

What is NAV?

One of the first things that a prospective investor looks for in a mutual fund scheme is its Net Asset Value (NAV). Search any comparative study of mutual funds, and NAV features prominently among the key comparison criteria. The NAV of a mutual fund scheme defines its performance over time.

In simple terms, NAV is the present market value of the investments held by a particular mutual fund scheme. Mutual funds invest the money collected from investors in a variety of securities. The value of these securities at any given time is divided by the number of units in the scheme to arrive at the NAV of the scheme. Since the value of these securities changes all the time, so does the NAV of the scheme. 

NAV formula and its components

The formula for calculating NAV of a mutual fund scheme is,

(Total Assets – Total Liabilities) / Total Units in the scheme

The total assets of the mutual fund scheme are the aggregate market value of the scheme’s investments at the end of every day. It would include stocks, bonds, commodities, or any other asset that the scheme has invested in. It will also include receivables, cash and cash equivalents, and any other accrued income. 

Liabilities, in the case of mutual funds, can be outstanding operating expenses, salaries, creditors, fees etc. Mutual funds with overseas investments may also have corresponding foreign liabilities.

Importance for the investor

When you shortlist mutual funds online, NAV should be one of the main considerations. A new mutual funds scheme would have a lower NAV but may not be the best option. An older scheme with a higher NAV may offer you a lower number of units for your investment but higher growth in the future. The Asset under Management (AUM) of the scheme, the fund manager, assets held, investment style are factors that decide the growth of the NAV in the future. If you have invested in a SIP, you should be more concerned with the growth of the NAV over time, rather than the NAV at the time of purchasing the scheme. 

NAV, and sale and purchase

Mutual funds get their NAV updated every day, with the SEBI defining a 9 PM deadline for the same. If you buy your units before 3 PM, you will get the units with the NAV of the same day. However, in the case of orders placed after 3 PM, NAV calculated at the end of the next day is considered. This is applicable even in the case of orders placed on a holiday. These rules are applicable in the case of both the sale and purchase of units.

If you have an active SIP, you can track the progress of your scheme by monitoring the NAV of the scheme. When maintained through an app, you can track the performance of your mutual funds online with Tata Capital Moneyfy app. You can get comprehensive coverage of the available mutual fund schemes online, helping you to make informed decisions on your mutual fund investments.


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