What is NAV?
What is it?
NAV (Net Asset Value) is the price of one unit of a mutual fund. It's calculated by taking the total value of everything the fund owns, subtracting its liabilities, and dividing by the number of units outstanding — updated once at the end of every business day.
Why should you care?
NAV tells you exactly what you're paying per unit when you invest, and what each unit is worth when you redeem. Unlike a stock price, NAV doesn't move during the day — every investor who buys or sells on the same day gets the same NAV, so there's no advantage to timing your order within a trading day.
Real-life example
If a fund's NAV is ₹45 and you invest ₹9,000, you receive 200 units (₹9,000 ÷ ₹45). A year later, if the NAV has risen to ₹54, your 200 units are worth ₹10,800 — a gain of ₹1,800, purely because the NAV per unit went up by ₹9.
Common mistakes
- Thinking a lower NAV means a "cheaper" or "better value" fund — NAV is just a unit price, not a quality indicator. A ₹10 NAV fund and a ₹500 NAV fund can deliver identical percentage returns.
- Comparing two funds' performance by comparing their NAV numbers instead of their percentage growth over time.
- Expecting same-day NAV for an order placed after the fund's daily cut-off time (typically 3:00 PM for equity funds) — it gets the next business day's NAV instead.
Why NAV level doesn't indicate fund quality
| Fund | NAV | 1-year return | Investment | Value after 1 year |
|---|---|---|---|---|
| Fund A | ₹20 | +15% | ₹10,000 | ₹11,500 |
| Fund B | ₹400 | +15% | ₹10,000 | ₹11,500 |
FAQ
Does a lower NAV mean the fund is cheaper to buy?
In terms of return potential, no — NAV is simply the current price of one unit, similar to how a ₹20 stock isn't inherently "cheaper" than a ₹2,000 stock in value terms. What matters is the fund's percentage growth over time, not the absolute NAV figure.
How often does NAV change?
NAV is calculated and published once per business day, after markets close, based on the closing value of everything the fund holds. It does not fluctuate during trading hours the way a listed stock's price does.
Why did my order get a different NAV than the day I placed it?
Mutual fund houses apply a daily cut-off time (commonly 3:00 PM for equity and debt funds). Orders placed before the cut-off get that same day's NAV; orders placed after it are processed at the next business day's NAV instead.
See this concept applied to your own portfolio
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