Chapter 4 of 12
NAV and units: how your investment is counted
6 min read
Net Asset Value, or NAV, is the price of one unit of a fund. It is worked out at the end of every business day.
How NAV is calculated
- Fund holds assets worth ₹1,000 crore and owes ₹10 crore in expenses and liabilities.
- Net assets are ₹990 crore, spread over 90 crore units.
- NAV is ₹990 crore ÷ 90 crore = ₹11 per unit.
If you invest ₹10,000 when the NAV is ₹11, you receive about 909 units. If the NAV later rises to ₹13.20, your holding is worth about ₹12,000. Your gain comes from the NAV rising, not from the number of units changing.
A low NAV is not a bargain
A fund with a NAV of ₹15 is not cheaper than one with a NAV of ₹500. NAV simply reflects when the fund started and how it has grown. What matters is the percentage return from the NAV you bought at, not the NAV itself.
Cut-off times
You get the NAV of the day your money is accepted, subject to the fund's cut-off time. An order placed after the cut-off is generally processed at the next business day's NAV. Liquid and equity funds have different cut-off rules, so check the scheme documents.
Key takeaways
- NAV is net assets divided by units outstanding.
- Compare funds by percentage return, never by NAV.
- Your allotment depends on the NAV and the cut-off time.
This content is for education only and is not investment or tax advice. Mutual fund investments are subject to market risks; read all scheme-related documents carefully.