NAV (Net Asset Value) is the per-unit value of a mutual fund. It tells you how much one unit of a mutual fund is worth on a given day.
NAV = (Total Assets – Total Liabilities) / Number of Units Outstanding
In simple words, it’s like checking the price tag of a product — except here, you’re checking the price of one mutual fund unit.
How Is NAV Calculated?
Fund houses calculate NAV at the end of each business day, after markets close.
Let’s say a mutual fund has:
- Total assets worth ₹100 crore
- Liabilities worth ₹5 crore
- 10 crore units issued
Then:
NAV = (100 – 5) / 10 = ₹9.5
This means each unit of the fund is worth ₹9.5 for that day.
Why NAV Matters (and Why It Doesn’t)
While NAV tells you the price of a unit, it doesn’t indicate whether a fund is expensive or cheap. A fund with a ₹10 NAV is not necessarily better (or worse) than a fund with a ₹100 NAV.
Why? Because mutual fund returns depend on percentage growth, not the starting NAV.
Example:
- Fund A NAV: ₹10 → ₹11 (10% return)
- Fund B NAV: ₹100 → ₹110 (10% return)
Both gave 10% returns, regardless of the starting NAV.
📊 What Should You Look at Instead?
While NAV is important for operational purposes (like purchase/redemption), investors should focus more on:
- Fund Performance History
- Expense Ratio
- Portfolio Quality
- Risk Level
- Fund Manager Track Record
Common Myths About NAV
Conclusion: Know NAV, But Don’t Chase It
Knowing a mutual fund’s NAV is important — it tells you how much you’re paying per unit. But chasing low NAV funds won’t guarantee better returns. Focus on long-term performance, fund strategy, and expert guidance instead.