Understanding Net Asset Value (NAV) in Mutual Funds

What does the term Net Asset Value (NAV) of a scheme mean?

Net Asset Value, often abbreviated as NAV, signifies the performance of a specific mutual fund scheme. Think of it as the price tag for each unit of a mutual fund. Essentially, it represents the current market value of the securities that the scheme holds. Given that the market value of these securities fluctuates daily, the NAV of a scheme follows suit, changing on a day-to-day basis.

For example, if a mutual fund scheme holds securities worth INR 200 lakh and has issued 10 lakh units (each valued at INR 10) to its investors, the NAV per unit will stand at INR 20. This is calculated by dividing the total market value of securities (INR 200 lakh) by the total number of issued units (10 lakh).

Importantly, mutual funds are mandated to disclose their NAVs daily to ensure transparency.

    • Related Articles

    • How is the buy NAV averaged for multiple orders in the same scheme on FYERS?

      When investing in mutual funds via FYERS, the Buy Net Asset Value (NAV) will reflect the closing price on the day of your purchase. If you make another investment in the same scheme on a different day, the Buy average for this second purchase will be ...

    • What happens if a mutual fund scheme closes down?

      If a mutual fund scheme winds up or closes, the assets of the scheme are liquidated. Following this, the proceeds are distributed to the unit holders in proportion to their holdings, based on the prevailing Net Asset Value (NAV) after deducting the ...

    • Does the NAV of a mutual fund scheme change daily?

      Yes, mutual funds pool investors' money to buy securities in financial markets. Given that these securities experience price fluctuations each day due to market dynamics, the NAV, which reflects the value of these securities, also shifts daily.

    • What does repurchase price mean in mutual funds?

      In the context of mutual funds, the repurchase price refers to the rate at which a closed-ended scheme buys back its units from investors. The repurchase price might be equivalent to the fund's Net Asset Value (NAV), or it could be slightly less if ...

    • What's the difference between an underlying asset and a derivative contract in trading?

      In derivatives trading, the term "underlying asset" refers to the financial instrument that a derivative represents, ultimately determining its value. On the other hand, a derivative contract is an agreement between two parties based on the value of ...