What Is NAV in Mutual Funds?
NAV (Net Asset Value) is the per-unit price of a mutual fund. It represents the market value of all securities held by the fund, minus liabilities, divided by total outstanding units.
How NAV Is Calculated
NAV = (Total Value of Assets - Liabilities) / Total Outstanding Units. If a fund holds stocks worth ₹100 crore, has ₹1 crore in expenses, and 10 crore units outstanding: NAV = (100 - 1) / 10 = ₹9.90 per unit.
Common NAV Misconceptions
The biggest myth: a fund with NAV of ₹10 is 'cheaper' than one with NAV of ₹50. This is FALSE. NAV is just an accounting number — what matters is the fund's return percentage. A fund growing from ₹50 to ₹60 (20%) is identical to one growing from ₹10 to ₹12 (20%).
NAV and Returns
Your return depends on the percentage change in NAV, not the absolute value. If you invest ₹10,000 in Fund A (NAV ₹10, you get 1000 units) and Fund B (NAV ₹100, you get 100 units), and both grow 10%, your investment becomes ₹11,000 in BOTH cases.
When Does NAV Matter?
NAV matters for calculating entry/exit amounts and for tracking fund performance over time. When you invest, your units = Investment Amount / NAV. When you redeem, your amount = Units × Current NAV.