November 26, 2025
1 mins read
The Net Asset Value (NAV) is the price of one unit in a mutual fund scheme. It gives investors a simple way to figure out how much a fund is worth right now, but it's crucial to remember that NAV doesn't tell you how well the fund will do in the future.
To get this number, you take the fund's entire assets (such as stocks and bonds) and take away all of its debts (like bills). After that, this net amount is split by the total number of units that all investors still own.
NAV is updated every day, generally after the market closes, to show how the market value of the fund's assets has changed. This is the price that investors pay to acquire or sell their mutual fund units to the asset management firm.
To understand Net Asset Value, you need to know how it affects prices. NAV is the market value of the fund's holdings, less any debts, divided by the total number of units.
Every trading day after the market closes, this number is adjusted to give an updated value. NAV is not affected by investor demand like stock prices are; it is purely dependent on the assets and liabilities that make up the fund.
This is why a greater NAV doesn't always signal that a fund is doing well. It might only mean that the fund is older and more established. This daily NAV information helps investors make smart choices.
The Net Asset Value (NAV) is an important number to look at when you buy a mutual fund. It shows how much one unit of that fund is worth right now.
To get this amount, you add up the value of all the assets (such as stocks and bonds), deduct any debts, and divide by the number of units that are still outstanding.
Every day after the market closes, its value is changed. This implies that the NAV shows how the fund did in the market the day before, not how much demand there is right now.
Every day, all AMCs use the method to figure out the Net Asset Value (NAV) of their Mutual Funds. To figure it out, you take the fund's total assets (the market value of its securities), subtract its total liabilities (such as fees and expenditures), and then divide that by the number of units that investors own.
NAV per share = (Assets - Liabilities) / Total number of outstanding shares
The NAV calculation tells you how much each unit of a fund is worth. It's a picture of how much one unit is worth at a certain time, based on how much the things it owns are valued on the market.
Every trading day after the market closes, its value is changed. Regulatory authorities like SEBI need this information to be made public every day to make sure that all investors can see it.
Example Calculation:
Total Assets: A fund has ₹500 lakh in securities.
Total Liabilities: The fund has to pay ₹100 lakh in bills.
Net Assets: The net worth is ₹400 lakh (₹500L - ₹100L).
Units: There are 20 lakh units that haven't been paid for yet.
NAV: ₹400 lakh / 20 lakh units = ₹20 for each unit.
To understand NAV practically, consider a hypothetical mutual fund. Suppose this fund holds assets (stocks, cash, etc.) valued at ₹500 lakh. It also has total liabilities amounting to ₹100 lakh.
First, you find the net assets: ₹500 lakh (Assets) - ₹100 lakh (Liabilities) = ₹400 lakh. If this fund has 10 lakh outstanding units, the NAV calculation is next.
You divide the net assets by the units: ₹400 lakh / 10 lakh units = ₹40 per unit. This ₹40 is the NAV, representing the intrinsic value of one unit for that day.
It's important to know what NAV does. It shows the worth of each unit (Assets - Liabilities / Units) and is updated every day. NAV is not the main way to tell how well a fund is doing, though.
People often think that a fund with a greater NAV is "better" or "more expensive". A high NAV might merely suggest that the fund is older and has built up its assets over time.
A fund with a low NAV is not always "cheap" or a good deal. Investors should look at total returns and other performance criteria instead of just the NAV value to get a better idea of how well a fund is doing.
If you want to know when to invest in mutual funds, you need to grasp what NAV is. The Net Asset Value is the price of a fund's assets per unit after taking away its obligations. But the NAV that applies, or the price at which transactions happen, depends on the type of fund and when the application is submitted.
The table below explains how to find NAV for subscriptions and redemptions in different situations:
Type of Fund | Subscription | Redemption |
Liquid/Overnight Funds | The NAV applies if it was used before 1:30 PM the day before. | Applications that come in before 3:00 PM get the same day's NAV. |
The NAV of the next business day applies if you use it after 1:30 PM. | Applications that come in after 3:00 PM get the NAV for the next business day. | |
If a fund isn't available for investment right away, the previous day's NAV is used when it becomes available. | ||
Other Schemes | If used before 3:00 PM, the same-day NAV applies. | If you apply before 3:00 PM, you will get NAV the same day. |
If you use it after 3:00 PM, the NAV for the next day will be used. | If you apply after 3:00 PM, you'll get the NAV for the next business day. |
If you want to better manage your investments, open a Demat account with Bajaj Broking. This makes it easier to check the Net Asset Value of your mutual funds every day.
When you apply, the "applicable NAV" will tell you what the NAV is for your transaction. This is because NAV is only calculated once a day.
Rules provide cut-off times to make sure things are fair. The time of day decides if you get the NAV for that day or the next working day.
For many plans (Equity, Debt, and Hybrid), applications that come in before the 3:00 PM cut-off time (for both buying and selling) get the NAV of the same business day.
After the cut-off time, applications that come in after 3:00 PM will get the NAV of the next working day.
Liquid and overnight funds have differing cut-off periods, which are usually earlier in the day (for example, 1:30 PM for subscriptions and 3:00 PM for redemptions).
Additional Read: Things You Need To Know About Mutual Fund NAV
NAV is helpful; however, it has several problems. You need to know what it doesn't say:
Not a Measure of Performance: A fund's past or future returns have nothing to do with its NAV being high or low. A fund's NAV can go up even if its overall return is bad.
Can't Compare Funds: You can't compare two funds by looking at their NAV. A fund with a ₹20 NAV is not "better" or "cheaper" than one with a ₹200 NAV.
NAV is not fixed by the market; it is not a stock price. It's not a price that shows how popular an investment is; it's a measurement of the underlying assets.
NAV is a static value since it is only calculated once a day, after the markets close. It doesn't change in real time like the price of a stock.
In short, NAV is an important number that reflects the daily value of a mutual fund per unit. But it can't be used to measure how well something is doing or how popular it is. A fund's NAV doesn't tell you if it's "good" or "bad". To make smart judgements, investors need to look at more than simply NAV. They should also look at overall returns and fund goals.
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Net Asset Value (NAV) represents the per-unit value of a mutual fund, calculated by dividing the fund’s total assets minus its liabilities by the number of outstanding units. It reflects the current value of each unit and helps investors understand the fund’s worth at a given time.
The NAV of a mutual fund is calculated by taking the total assets (cash, securities, receivables) and subtracting total liabilities (expenses like management fees) and dividing by the total outstanding units. This formula provides the accurate per-unit value, essential for entry and exit decisions.
NAV is vital as it reflects the actual worth of each unit, enabling investors to track the performance and market value of their investments. Although Net Asset Value doesn’t indicate overall returns, it helps investors assess the fund’s per-unit value in the current market.
The Net Asset Value is updated daily, typically at the end of each business day. SEBI mandates fund houses to calculate and publish NAVs daily, providing investors with up-to-date valuations and aiding them in making timely investment decisions.
Several factors, such as stock price fluctuations, market volatility, interest rates, and fund expenses, can impact Net Asset Value. Changes in the underlying assets or liabilities of the fund directly affect the NAV, altering the per-unit valuation for investors.
While NAV itself doesn’t determine investment returns, it affects the entry and exit points in a fund. A rise in Net Asset Value reflects asset growth, contributing to returns for existing investors. Therefore, NAV helps investors evaluate growth and make informed buy or sell decisions.
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