NAV

Investments

Quick Definition

NAV (Net Asset Value) is the per-unit value of a mutual fund, calculated by dividing the total value of its assets minus liabilities by the number of outstanding units.

Detailed Explanation

NAV represents the price at which investors buy or sell units of a mutual fund. It reflects the fund’s performance and is updated daily after market hours.

The formula is:
NAV = (Total Assets − Total Liabilities) ÷ Total Number of Units

Key Points About NAV

  • It shows the value of one unit of a mutual fund
  • Changes daily based on market value of underlying assets
  • Used for purchase (investment) and redemption (withdrawal)
  • A higher NAV does not mean the fund is expensive—it depends on fund performance

Mutual funds are regulated by the Securities and Exchange Board of India, ensuring transparency in NAV calculation.

Why NAV Matters

  • Helps track fund performance over time
  • Important for buying and selling decisions
  • Used to calculate returns on investment

Example

"<p> If a mutual fund has total assets of ₹100 crore, liabilities of ₹5 crore, and 5 crore units:<br> <strong>NAV = (100 − 5) ÷ 5 = ₹19 per unit</strong> </p>"

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