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What is Mutual Fund NAV

What is Mutual Fund NAV

You might have noticed the term "Net Asset Value (NAV) attached with mutual funds. But what is Mutual Fund NAV?

Here are some frequently asked questions about Net Asset Value:

  1. What is Mutual Fund NAV?

    Mutual Fund NAV or Net Asset Value is the market value of a mutual fund unit. In simple terms it the price at which you can buy or sell a mutual fund. NAV and dividends have an impact on your portfolio's total return in the long-run.

  2. How is NAV calculated?

    NAV is calculated by adding the market value of all the shares in the fund (assets) then subtracting its liabilities (debts). The total is divided by the number of total mutual fund units. NAV= (Value of Assets–Value of Debts)/ (Number of total mutual funds units).

  3. When is NAV calculated?

    NAV is calculated at the closing of the market hours; it considers the closing market price of the assets that the fund holds.

  4. Is NAV important for investors?

    Investors can focus more on the performance and returns of the mutual fund scheme, instead of its NAV. However, a higher NAV denotes that the fund has worked well or the scheme has been around for a long time.

  5. Why does NAV keep fluctuating daily?

    Mutual Fund's NAV changes daily as the value depends on the assets of the scheme. You should pay attention to the annualised returns of a fund over a different time frame to get an idea about its performance.

  6. Does investment timing affect NAV?

    A mutual fund company announces its latest NAV on all working days, and it is strictly time-bound. Hence, mutual funds keep a deadline for daily investments. It is 2 p.m. for liquid funds and 3 p.m. for equity or debt funds.

Investors are allotted NAV of the same day, the previous day or the next day depending on the time they submit their application and funds.
In case of a liquid fund, the deadline is 2 p.m.
  • If you invest before 2 p.m. you will be allotted units at the NAV of the previous day; this will also happen if you transfer the money before the deadline.
  • If you miss the deadline and submit your application and money after 2 p.m, you will be given units at the NAV of the same day.
  • If you submit your application before the deadline but fail to transfer the money before the deadline, you will not receive the previous day's NAV.
In the case of equity and debt funds, the deadline is 3 p.m.
  • If you submit the application before the deadline, you will get the unit based on the same day's NAV.
  • Submitting the application after the deadline will get you the next day's NAV. Unlike liquid funds, it is not necessary to transfer the funds before such timeline.

If you want to know more about mutual funds and are keen on earning a regular monthly income, start your mutual fund investments through FundzPark.

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