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What is Mutual Fund NAV & How it is Calculated?


Mutual fund scheme consists of several units. These units are held collectively by different investors. The value of each unit is known as the Net Asset Value ("NAV"). Similar to the price of each share, NAV refers to the price of each mutual fund unit. Like the price of any share that fluctuates in the market, the NAV of a mutual fund also changes. Thus, the NAV in a mutual fund is calculated every day. A mutual fund's NAV is computed when the market closes at the end of each day.

Is it necessary for you to know the NAV of a mutual fund?

Yes, knowing the NAV of a fund will let you know the price at which you can purchase the units of a fund. Let us say, for example, the NAV of a fund is 10, then the price you will have to pay for each unit is Rs. 10. It is thus a determining factor while selling and buying units. It will help you know the number of units you have purchased in a fund and the price at which you can buy them.

NAV IN MUTUAL FUND - How is it calculated?

The formula used for calculating NAV is simple. It is the total assets minus the total liabilities divided by the total number of units issued. To understand how the calculation of NAV is done, you first need to understand the concepts used while calculating NAV. These are:

Total Assets

It is the market value of all the securities in a portfolio. It means the investments made in the scheme. This would include equities, bonds, debentures, dividends and the interest accrued.

Total liabilities

Liabilities are the expenses incurred by the fund house, the management or the remuneration paid to the fund manager. They also include the amounts owed towards outstanding payments, money payable to lenders or foreign liabilities.

It is the total of all units held by all investors in a mutual fund.

When is NAV calculated?

NAV changes every minute according to the market fluctuations of different assets in the fund. NAV is calculated daily at the end of the market day after it closes to maintain some uniformity. But unlike the stock market, the fluctuation is not based on demand and supply. It is based on the book value of the assets.

How is Mutual Fund NAV calculated?

The NAV of a mutual fund is calculated by taking the total value of all assets and cash in a fund’s portfolio, subtracting the liabilities and then dividing the total amount by the total number of outstanding shares. The NAV of a mutual fund represents the price per unit of the fund. It fluctuates by the minute but is calculated at the end of each market day to maintain uniformity.

If the NAV is high or low, is there a threat to the performance of your funds?

NAV of a fund does not indicate the performance of your fund. It only denotes the price of your fund. A high or a low NAV does not determine how lucrative your fund is. There's a misconception that if the NAV of a mutual fund is high, it will yield you better returns or if the NAV of the fund is low, the cheaper is the investment, and the number of units given will be more significant. However, this is not true. If you have the same amount invested in two identical schemes, the NAV of your fund is irrelevant. The only difference you will find is in the number of units held. The NAV will not determine your investment growth or future returns.

Additional reads: A Mutual Fund with High NAV or Low NAV - Which one should you choose?


The nature, assets and liabilities of each scheme are different. Therefore, while looking at the NAV in mutual funds, you need to focus on the profitability and not the daily changes of the NAV. Knowing the NAV of a fund can only help you understand the unit's price on that day. It will be of relevance to the cost of the unit in a fund while buying or selling.


   1. Is a higher or lower NAV better?

Often, people assume that the NAV of a fund is indicative of its performance. In reality, a high or a low NAV does not matter. With a lower NAV, you can purchase more units of the fund. With a higher NAV, you will get fewer units for the same amount of investment. If you want to measure a fund's performance, then what you really need to be looking at is its returns, the fund manager's performance, and how it compares with its peers in terms of returns. NAV simply helps you determine the price of the mutual fund.

   2. What time do mutual funds update NAV?

While the NAV of a mutual fund may fluctuate by the minute every day, mutual funds update their NAVs at the end of each market day. According to the rules of The Association of Mutual Funds in India, all mutual fund houses must update their NAV on their website and AMFI’s website by latest 11 PM.

   3. What is the best NAV for mutual fund?

The NAV of mutual funds varies from one fund to another depending on its fund size, the assets it is invested in, the returns it generates, etc. While it is not possible to say what the best NAV for a mutual fund is, know that the NAV does not indicate the performance of a fund. It is simply reflective of the mutual fund’s price. If the NAV is low, you will get more units compared to a higher NAV for the same investment amount.

   4. Is NAV calculated daily?

Yes, the NAV of a mutual fund is calculated on a daily basis. It needs to be updated on the AMFI website and the mutual fund’s own website by 11 PM every trading day.

ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. AMFI Regn. No.: ARN-0845. We are distributors for Mutual funds. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Please note, Mutual Fund related services are not Exchange traded products and I-Sec is just acting as distributor to solicit these products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein mentioned are solely for informational and educational purpose.

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