Mutual Fund NAV: Meaning, Schemes, Formula, Calculating, & Leveraging Net Asset Value

Home

Services

Products

Help

Get App

Understanding Net Asset Value (NAV) in Mutual Funds

Successful investment in mutual funds involves more than just looking at their past performance. Future performance matters, too. Today, we will walk you through the crucial aspects of Mutual Fund NAV, providing insights for informed investment decisions. Understanding Net Asset Value is key to unraveling a fund's potential.

What is Mutual Fund NAV?

Net Asset Value (NAV) in mutual funds represents the per-unit value of a scheme. Calculated by deducting liabilities and expenses from total assets, it indicates a fund's performance. Understanding NAV is crucial for making informed investment decisions. Typically declared daily for open-end funds, NAV reflects the fund's value at each trading day's end. NAV calculations may occur less frequently for closed-end funds, such as weekly or monthly. NAV, starting around ₹10 during New Fund Offers (NFOs), provides investors with an overview of a fund's financial health.

Current NAV for Mutual Fund Schemes

Large Cap Funds

Fund Name	Fund Size (in Rs. Crs)	NAV	Exit Load
Canara Robeco Bluechip Equity Fund	10,090	46.57	Within 1Y: 1%
ICICI Prudential Value Discovery Fund	32,754	325.96	Within 12M: 1%
Kotak Bluechip Fund	6,370	425.93	Within 1Y: 1%
Nippon India Large Cap Fund	15,855	65.80	Within 7D: 1%

Broad List

Fund Name	Fund Size (in Rs. Crs)	NAV	Exit Load
HDFC Flexi Cap Fund	38,668	1,329.05	Within 1Y: 1%
Mirae Asset Large Cap Fund	35,349	87.73	Within 1Y: 1%
SBI Bluechip Fund	38,881	71.77	Within 1Y: 1%
UTI Mastershare Unit Scheme	11,314	215.09	Within 1Y: 1%

Index Funds

Fund Name	Fund Size (in Rs. Crs)	NAV	Exit Load
Bandhan Nifty100 Low Volatility 30 Index Fund	27	11.51	Nil
Edelweiss Nifty Midcap150 Momentum 50 Index Fund	54	12.26	Nil
HDFC Index Fund-NIFTY 50 Plan	9,446	183.62	Within 3D: 0.25%
ICICI Prudential Nifty 50 Index Fund	4,977	194.81	Nil
ICICI Prudential Nifty Next 50 Index Fund	2,948	39.54	Nil
Kotak Nifty 50 Index Fund	347	12.63	Nil

How is Mutual Funds NAV calculated?

Mutual fund NAV calculation involves a straightforward formula:

Net Asset Value = (Total Assets – Total Liabilities) / Total Outstanding Shares.

Total Assets: Cumulative market value of fund investments, cash, receivables, and accrued income.
Total Liabilities: Outstanding payments, money owed, fees, and other obligations.
Total Outstanding Shares: Total shares available for trading.

Suppose a mutual fund has assets worth 5000, liabilities of 1000, and 1000 outstanding shares. The total NAV would be:

NAV = (5000 - 1000) / 1000 = 4.

Daily valuation ensures real-time tracking, reflecting market changes accurately. This calculation guarantees transparency and informed investment decisions, which is crucial for navigating the dynamic world of mutual funds.

Latest Mutual Fund NAV Calculation

The calculation of Mutual Fund NAV is a daily process, assessed by investment firms post-market closure at 3:30 pm. This routine practice accurately evaluates the portfolio's total value using the previous day's closing prices. Updating NAV after the market closes is crucial for giving investors real-time insights into their fund's performance. For instance, top-performing large-cap funds consistently showcase their NAVs, reflecting the dynamic nature of the market and helping investors make informed decisions.

NAV and Mutual Fund Returns

NAV plays an important role in determining mutual fund returns. The relationship between NAV and fund performance is direct; as NAV increases, so does the fund's value. Changes in NAV directly influence investor returns – a higher NAV often means better returns. Analysing historical NAV trends provides valuable insights for investors, aiding in strategic decision-making and predicting future fund performance.

Role of NAV in the Performance of a Fund

The Net Asset Value (NAV) is a vital gauge of a mutual fund's past performance. However, it doesn't influence returns directly. Examining the growth or dip in NAV unveils a fund's historical trajectory, assisting investors in making informed decisions.

For example, if a fund's NAV has risen from Rs 10 to Rs 150 over the past five years, it indicates increased Assets Under Management (AUM) and growing investor confidence in the fund manager's capabilities.

Yet, it's crucial to understand that NAV doesn't determine a fund's future performance. It's a tool for retrospective analysis, offering insights into a fund's historical journey rather than predicting its future gains or losses.

What is a Good NAV for a Mutual Fund?

A "good" Net Asset Value (NAV) lacks a universal standard in mutual funds. Relying solely on NAV as a performance indicator is inadequate. Investors benefit from considering historical NAV, providing insights into the fund's growth trajectory over time.

Factors Affecting Mutual Fund NAV

Market fluctuations directly impact NAV, reflecting changes in underlying asset values.
Fund expenses, like management fees, reduce NAV.
Dividends and interest earned increase NAV, positively impacting fund value.
Redemption or purchase of fund shares affects NAV, as it alters the total assets under management.
Changes in the composition of the fund's portfolio influence NAV as well.

Tax-Saving Mutual Funds and Other Investment Options

Tax-saving mutual funds like the Equity Linked Saving Scheme (ELSS) is among the best alternative. ELSS not only promises potential returns but also provides tax benefits. Another modern investment approach is Digital Gold. It offers easy accessibility and diversification. Investors keen on optimizing tax advantages and diversifying their portfolios can strategically incorporate ELSS mutual funds Digital Gold for a well-rounded investment strategy.

Frequently Asked Questions (FAQs)

What is NAV and its formula?

Net Asset Value (NAV) is the total value of a mutual fund's assets minus its liabilities. The formula is (Assets - Liabilities) / Total Number of Outstanding Shares.

How do you calculate the net value of assets?

The net value of assets is calculated by subtracting the liabilities from the total value of the mutual fund's assets.

Is High NAV good or bad?

High NAV is not inherently good or bad. It reflects the fund's value per share. What matters is the fund's performance and suitability for your investment goals.

What if NAV is low?

A low NAV doesn't indicate poor performance. It may offer affordable entry points for investors. Focus on the fund's historical performance and potential for growth.

Is NAV equal to price?

NAV and price differ. NAV is the fund's value per share, while the price is what investors pay or receive. They fluctuate based on market conditions.

What makes NAV increase?

NAV increases when the fund's assets appreciate. Positive market movements and good investment choices by the fund manager contribute to NAV growth.

Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.

Understanding Net Asset Value (NAV) in Mutual Funds