value of mutual fund nav

What is the Value of Mutual Fund Net Asset Value (NAV)?

Net asset value (NAV) is the market value per unit mutual fund. It is the price at which a fund company buys fund units and sells them back to the fund estate. It is calculated by dividing the total value of a portfolio of all assets, minus all its debts. The NAV of a fund is computed either by the mutual fund house or by the hiring accounting firm of the mutual fund. 

What Time is the NAV Calculated?

The NAV calculation is impossible during market hours because the price of the underlying holdings (say stocks) changes every minute. The NAV is calculated at the end of each market day, taking into account the market value of the securities holding the fund or scheme. 

How Vital is NAV to Investors?

The NAV becomes irrelevant when the amount of investment is the same in different schemes. An investor needs to look closely at the plan. 

What Does Low and High NAV mean in Different Schemes?

Best illustration by an example. Suppose we invest hypothetically in two schemes A and B. Scheme A has an NAV of Rs 10, while Scheme B has a NAV of Rs 50. We invested Rs 1 lakh in both schemes. Scheme A would be seen as an inexpensive purchase as Scheme B had 10,000 units as compared to 2,000 units.

Now, assume that both schemes are returning 10% a month. The NAV of Scheme A is now Rs 11 and the NAV of Scheme B is Rs 55. In both cases, the value of your investment is Rs.1, 10,000. Hence we see that the NAV of a scheme is irrelevant when the return is generated. The only difference is that in the case of Scheme A, the investor gets more units, and in Scheme B, he gets fewer units. For two schemes with similar portfolios and other things that remain constant, the difference in NAV will rarely be as long as the plans provide the same returns.

Another example, if the market value of securities of a mutual fund scheme is Rs 200 lakh and the mutual fund has issued Rs 10 lakh units of Rs. 10 to each investor, then the fund’s NAV per unit of Rs 20. It is necessary to state the NAV regularly – daily or weekly – depending on the type of plan. 

What Do Daily Changes in NAV Indicate?

Regular changes in the NAV of a mutual fund scheme indicate an increase or fall in the scheme’s capital. However, financial planners tell investors that the daily changes in the NAV of the plan do not matter when choosing a mutual fund scheme for their investment. To judge their performance, investors should look at the annual return of the fund in different timeframes.


Mutual funds invest in securities markets raised from investors. Net asset value is, in simple terms, the market value of securities owned by the scheme. Because the market value of securities changes every day, the NAV of a scheme also changes daily. NAV is the market value of a plan’s securities per unit divided by the total units of the particular date.

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