What is NAV in Mutual Funds
Every time you open a mutual fund app and see that number sitting next to your fund’s name—that is the NAV. Most people glance at it to check its metrics and move on. Very few actually understand what NAV in Mutual Funds represents or why it matters.
NAV — Net Asset Value — is essentially the per-unit price of a mutual fund. When you invest ₹5,000 in a fund, the number of units you receive depends entirely on what the NAV is that day. When you redeem, it’s the same story .
A stock can jump 8% in a morning because of a tweet, a rumor, or just general market excitement. NAV cannot do that. It does not respond to sentiment. It is recalculated every evening based on what the fund’s actual holdings are worth—nothing more, nothing less.
That single difference changes how you should think about investing in mutual funds entirely.
What Does NAV Mean in Mutual Funds?
Simple Meaning of NAV
A mutual fund pools money from thousands of investors. That pooled money goes into a portfolio — stocks, bonds, cash, or whatever the fund’s mandate allows. At the end of each market day, the fund divides the total current value of the portfolio by the number of units held by all investors. The result is the NAV.
One unit, one price. That price today is the NAV.
People draw comparisons to stock prices, which makes sense on the surface. You pay a price per unit in both cases. But the mechanics are different. Stock prices are live — they move every second the market is open. Mutual funds NAV updates once, after the market closes. You cannot buy a mutual fund at 11 AM and sell at 2 PM to catch an intraday move. It does not work that way.
When a fund has an NAV of ₹74, every investor buying or selling that day transacts at ₹74. No negotiation, no bid-ask gap. Just one number, applied equally.
Why NAV Is Important for Investors
A few practical reasons why NAV actually matters to you as an investor:
- It determines how many units you get when you invest
- It determines the value of your holdings at any point
- Tracking it over time shows you how the fund’s underlying portfolio has grown
- It is the basis for calculating your returns when you exit
What it does not do—and this point is worth repeating— is indicate whether a fund is a good or bad investment. NAV is a valuation tool, not a performance verdict.
NAV Formula in Mutual Funds
Standard NAV Formula
The NAV formula that mutual fund houses and AMFI use every day is:
NAV = (Total Assets – Total Liabilities) / Total Number of Outstanding Units
Three inputs. Basic division. The math is not the hard part — understanding what feeds into those three inputs is where most people stop paying attention.
Components of NAV Calculation
What Counts as “Assets” in NAV?
Everything the fund owns or is owed:
- Market value of all stocks, bonds, and securities in the portfolio — priced at that day’s closing rates
- Cash held in the fund, including short-term money market instruments
- Accrued interest on bonds and fixed income holdings
- Dividends that have been declared but not yet received
What Counts as “Liabilities”?
Everything the fund owes:
- Management fees and advisory charges
- Administrative, audit, and custodian costs
- Brokerage payables on pending trades
- Any other short-term obligations the fund carries
Outstanding units—the denominator—is simply the total units across all investors in that fund on that day. It shifts constantly as people invest and redeem.
How NAV Is Calculated (Step-by-Step)
Step 1: Calculate Total Assets
After 3:30 PM, when Indian markets close, the fund’s portfolio gets valued at closing prices. Every stock, every bond, every instrument is marked to the market. Add the cash and any accrued income. That total is the asset figure for the day.
Step 2: Deduct Liabilities
Subtract daily pro-rated expenses — management fees, operating costs, and everything the fund owes at that point. What is left is the net asset value of the entire fund.
Step 3: Divide by Total Units
Divide the net assets by the total outstanding units. The number you get is the NAV — published by 9 PM typically—and the price at which all eligible transactions for that day are settled.
Real-World NAV Calculation Example
Let us use actual numbers.
A mutual fund on a given day has:
- Total Assets = ₹100 crore
- Total Liabilities = ₹5 crore
- Outstanding Units = 10 crore
NAV = (100 – 5) / 10 = ₹9.5 per unit
You hold 3,000 units. Your portfolio value today: ₹28,500.
Tomorrow the market rallies. Fund assets climb to ₹103 crore. Same liabilities, same units.
NAV = (103-5) / 10 = ₹9.8. Your 3,000 units are now worth ₹29,400.
That ₹900 gain did not come from anything you did. It came from the market, affecting the value of what the fund holds. That is how NAV fluctuations directly translate into your portfolio’s daily movement.
Mutual Fund NAV Today – How to Check Latest NAV in India
Where to Find Latest NAV of Mutual Funds India
Three places worth bookmarking:
- AMFI (amfiindia.com): Publishes end-of-day NAV for every scheme registered in India. Free, no account needed, updated daily.
- Fund House Websites: SBI MF, HDFC MF, ICICI Prudential, Axis, NBFCs like BULWARK CAPITAL, and others —all maintain NAV pages on their portals.
- Investment Apps: MF Central and other apps—these show live NAV data and show it directly in your portfolio view.
When Is NAV Updated?
Mutual fund NAV today is not a real-time number. For equity and hybrid funds, it is typically published by 9:00 PM after markets close. Debt funds may update earlier.
Cut-off timings matter more than people realize. SEBI rules say:
- Equity and hybrid funds—transaction must reach the AMC before 3:00 PM to get same-day NAV
- Liquid and overnight funds—the cut-off is tied to actual realization of funds, not submission time
Many investors assume submitting before market close is enough. It is not—fund credit has to happen too. If you miss the window, you will receive the next day’s NAV. On a big market movement day, that gap can hurt.
NAV Fluctuations—Why Does NAV Change Daily?
Market Movements
The most straightforward reason. Equity fund NAVs mirror the daily performance of the stocks they hold. Sensex up 1.2%? Equity fund NAVs broadly go up too. Bad session? They come down. It is a direct reflection.
Interest Rate Changes
Debt funds feel these changes acutely. Bond prices move inversely to interest rates—when the RBI hikes rates, bond values fall, which drags NAV down. When rates drop, bonds appreciate and NAV climbs. Debt fund investors should track RBI policy closely for this reason.
Fund Expenses and Expense Ratio
This is the quiet one. Every fund has an annual expense ratio — a percentage charged for running the fund. It does not get deducted as a lump sum once a year. It is shaved off the fund’s assets every single day, in tiny amounts.
A 2% expense ratio on a ₹10,000 investment costs you roughly ₹200 a year. Over a decade, this compounding drag becomes significant. Two funds with identical gross returns can end up with meaningfully different NAVs simply because of their expense ratios. Always check the expense ratio—it directly impacts how your NAV grows.
Dividends and Redemptions
On the ex-dividend date, NAV drops by exactly the dividend amount. The fund is paying out part of its assets—what remains is worth less. Your total value does not change on that day, but the NAV number does.
Heavy redemptions can also force a fund to liquidate positions, sometimes at unfavorable prices. This phenomenon is rare in large funds but worth knowing.
High NAV vs Low NAV – Which Is Better?
Myth: Lower NAV Means a Cheaper Fund
This one comes up constantly. A new investor sees Fund A with NAV ₹14 and Fund B with NAV ₹280 and immediately feels Fund A has more room to grow. That instinct is wrong.
NAV has no ceiling it is stretching toward. It is not undervalued at ₹14 the way a stock might be. It is just the current arithmetic result of what that fund’s portfolio is worth divided by its units. Nothing more.
Reality: NAV Does Not Indicate Performance
A simple comparison makes this undeniable:
- Fund A: NAV goes from ₹14 to ₹16.8 → 20% return
- Fund B: NAV goes from ₹280 to ₹336 → 20% return
Identical returns. You would have made the same money in either fund with the same capital. Fund B’s higher NAV just means it has been compounding for longer — that is actually a good sign, not a red flag.
Choosing a fund based on low NAV is like choosing a hotel room based on its room number. Choosing a fund based on its low NAV is completely unrelated to what matters.
NAV in Closed-End Funds vs. Open-End Funds
Worth knowing, because these two fund types treat NAV differently.
Open-End Funds — the kind most retail investors use—have no fixed unit count. The fund creates new units when you invest and cancels units when you redeem. Every transaction happens at NAV. Clean, transparent, no surprises.
Closed-End Funds — issue a fixed number of units during the NFO. After the NFO closes, those units get listed on a stock exchange. From that point, you buy and sell from other investors at market price — which can be higher than NAV (premium) or lower (discount). The NAV still gets calculated daily, but it is not necessarily the price you pay.
Most retail investors in India deal almost exclusively with open-end funds, so this distinction rarely comes up in practice — but it is good context to have.
Role of NAV in the Performance of a Fund
NAV history is a legitimate performance tracking tool. If you invested when NAV was ₹42 and it is now ₹68, that is roughly 62% growth. Useful to know.
The problem is when people use NAV in isolation to judge a fund. A NAV chart that goes up in a straight line during a bull market does not mean the fund is brilliantly managed — the market may have done all the heavy lifting.
Pair NAV-based return data with CAGR over multiple timeframes, rolling returns, and how the fund behaved during a downturn. That combination gives you a real picture. NAV alone does not.
Difference Between NAV and Market Price
NAV vs Stock Price
The fundamental difference:
- Stock prices are set by live buying and selling throughout the trading day
- NAV is derived from a formula, once per day, after markets close
- Stock prices move on news, rumours, sentiment — sometimes wildly
- NAV cannot be speculated on. It moves only when the assets it reflects move
For investors who find stock market volatility stressful, this is actually one of the appeals of mutual funds. You are not watching a number tick up and down all day.
NAV vs ETF Price
ETFs are different. They hold baskets of securities like mutual funds but trade on exchanges in real time. During market hours, their traded price can sit slightly above or below the fund’s actual NAV — this gap is called the premium or discount. Arbitrageurs typically close the gap fast, but it exists.
With a regular open-end mutual fund, there is no such gap. NAV is the price. Period.
Should You Actually Care About NAV?
Honestly—yes and no.
Yes, you should care about NAV because it helps you calculate the number of units you are buying, determine the current value of your portfolio, and assess your returns upon exit.
No, because NAV should never be the reason you pick one fund over another. It should not drive your entry or exit timing. And a lower NAV absolutely does not mean higher upside.
Think of NAV as a unit price, not a signal. It tells you the value of what you own. It does not tell you whether what you own is beneficial.
Common Mistakes Investors Make About NAV
- Buying funds with low NAV thinking they are getting more units for the same money — you are, but more units of a lower-valued fund is identical to fewer units of a higher-valued one if the underlying portfolio is equivalent
- Interpreting rising NAV as a safe fund—NAV in a bull market rises almost everywhere. What matters is how a fund holds up when things turn
- Missing cut-off times and not realizing it—particularly relevant for larger investments where a day’s NAV difference can be thousands of rupees
- Underestimating the expense ratio effect on NAV — this compounds silently over years. A 1.5% difference in expense ratio is not trivial over a 10-year horizon
- Comparing NAVs across funds as if they were on the same scale — they are not. Each fund’s NAV differs with own internal number with no relation to another fund’s
Conclusion
NAV in mutual funds is not complicated — but it is widely misread. It is the per-unit value of a fund, calculated from actual assets minus actual liabilities, divided by total units. That is all it is.
It changes daily because markets move, interest rates shift, and expenses are deducted. It is higher in older funds because they have been compounding longer — not because they are riskier or overpriced. If that seems too much to handle alone, that’s understandable. Investing well is not just about knowing what NAV means — it is about putting the right funds together in a way that actually matches your goals and timeline.
And once that portfolio starts growing, it does not have to just sit there. If you ever need liquidity without wanting to break your investments, a loan against mutual funds is one of the smartest and most underused options available — your units stay intact, your returns keep compounding, and you still get the cash you need.
That is exactly what Bulwark Capital specialises in. Quick, hassle-free loans against your mutual fund holdings — so your long-term investments never have to take a hit for short-term needs. Visit bulwarkcapital.in and see how your existing portfolio can work harder for you.
Frequently Asked Questions (FAQs)
Not inherently. Every new fund starts at ₹10 by convention. That tells you nothing about the fund’s strategy, the manager’s track record, or what the portfolio will look like. NFOs should be evaluated on merit, not starting NAV.
Only if every single asset in the fund simultaneously becomes worthless — which does not happen in a properly diversified fund. Significant NAV erosion is possible in very concentrated or poorly managed funds, but zero is essentially theoretical.
When a dividend is paid out, that cash leaves the fund. The fund’s total assets reduce by exactly that amount, so NAV drops proportionally. Your total wealth on that day is unchanged — the value just moved from fund units to your bank account.
Yes. In growth plans, all gains remain in the fund and compound, leading to a rising NAV. In IDCW plans, periodic payouts reduce NAV. Same underlying portfolio, different NAV trajectories depending on how returns are distributed.
