What is NAV and How Does It Get Calculated?


  • NAV represents the current market value of a mutual fund unit
  • NAV calculation is made by subtracting the debts from the assets of a mutual fund unit and then dividing the resultant sum by the number of outstanding units

Are you looking to invest in a mutual fund? If so, then you must be willing to know the returns it has provided to investors over the years, won’t you? The talk is more about returns than what constitutes the same. Yes, it’s the net asset value (NAV) that you need to keep an eye on. The movement of NAV over the investment tenure would greatly dictate the returns from a mutual fund. In a nutshell, it’s the price at which you buy and sell a mutual fund unit. How is it getting calculated? To know more about mutual fund NAV calculation, read the post further.

Is NAV the Market Value of a Mutual Fund Unit?

Yes, NAV is the market value of a mutual fund unit and varies on a daily basis as it trades on all working days. It won’t be wrong to say that NAV gives the assessment of the mutual fund performance.

How to Calculate the NAV of a Mutual Fund?

The calculation of NAV is simple. Subtract the debts from the assets and divide the resultant sum by the number of outstanding units.

NAV = (Assets-Debts)/Number of Outstanding Units

Now that you are aware of the formula that is used to calculate the NAV on a daily basis, let’s get into its constituents one after another.

What Do Mutual Fund Assets Comprise of?

Assets are basically the market value of mutual fund investments (securities+cash), receivables and accrued income. The current value of stocks and bonds will form the part of securities. Dividend and accrued interest on the securities would also add to the asset.

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What Do Mutual Fund Debts Mean?

The debts consist of both liabilities and expenses of a mutual fund. Liabilities would include the payments owed to banks, pending payments, registrar fee, commission to distributors (For Regular Plan), etc. The expenses would include the marketing and promotional expenses of the mutual fund unit.

What Do Number of Outstanding Units Mean?

The number of outstanding units is the number of units that have been allocated to a particular mutual fund scheme.

Disclaimer – “Mutual fund investments are subject to market risks. Please read the offer document carefully before investing”.