NAV
Net Asset Value is the per-unit market value of the securities held by a mutual fund scheme.
NAV is published at the end of each business day: total assets minus liabilities, divided by outstanding units. A low NAV does not make a fund cheap — returns depend on percentage change in NAV, not its absolute level.
Why NAV matters when comparing products
Understanding Net Asset Value (NAV) is crucial for Indian investors to evaluate mutual funds. It represents the per-unit value of the scheme's assets. While NAV indicates the current worth, its absolute level alone does not determine if a fund is 'cheap' or 'expensive'. Investment returns are based on the percentage change in NAV over time, making it a key metric for tracking fund performance and comparing different schemes on an apple-to-apple basis.
Illustrative example
If a mutual fund scheme has total assets worth ₹100 Crores and liabilities of ₹10 Crores, its net assets are ₹90 Crores. If there are 1 Crore units outstanding, the NAV would be ₹90 (₹90 Crores / 1 Crore units). If this NAV later rises to ₹99, an investor would have gained 10% on their investment.