Nav of mutual fund is the most important and probably the most visible factor. Over a period of time, mutual funds have emerged as one of the investor’s favorite financial instrument. We all tend to ask, search and inquire about of nav of mutual fund but do we really understand “what it is and how it is calculated?”In the rush of investing, we tend to ignore some basic points. So just to bring some light to it, we have decided to write a small post about it.

Nav of mutual fund stands for Net Asset Value and it indicates the unit price of a mutual fund or Unit Linked policies also. Nav of mutual fund is like stock price of a particular company which indicates it’s current value and can be used to study past trend, performance and sometime, expected future directions.

Nav of mutual fund is calculated by dividing (the total value of all the cash and securities of the entire fund subtracted any liability) divided by (Number of shares outstanding). Nav of mutual fund is calculated each day at the end of trading session. Nav of mutual fund is used to buy and sell mutual fund’s units.

For example, if a fund has assets of INR 50 million and liabilities of INR 10 million, we will have a value of INR 40 million. By dividing this value of a fund by the number of outstanding units, you are left with the price per unit (NAV). In our example, if the fund had 4 million shares outstanding, the price-per-share value would be INR 40 million divided by 4 million, which equals INR 10.

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