Everything You Need to Know About the Current Net Asset Value (NAV)

If you are investing or thinking about investing in mutual funds, you will often come across the term “NAV.” NAV, or Net Asset Value, represents the market value of a mutual fund. You can find the NAV on the scheme’s factsheet or the fund’s website.

What Is Mutual Fund NAV?

The NAV of a mutual fund is the per-unit market value of a mutual fund scheme on a particular day. It is calculated as the difference between the fund’s total assets and its liabilities, divided by the total number of outstanding units at the end of a business day.

Put simply, the NAV is the price per unit of a mutual fund on any given day. Unlike stock prices, which change constantly throughout the trading day, mutual fund NAV is calculated only once, at the end of the day. Therefore, NAVs are not updated in real-time. All mutual funds must disclose their latest NAVs daily.

How Is Mutual Fund NAV Calculated?

NAV is calculated using the formula:

Current Mutual Fund NAV = (Total Assets – (Total Liabilities + Total Expenses)) / Total Number of Outstanding Units

Mutual funds invest in different securities, such as stocks, bonds, and cash, depending on their investment objectives. The total assets of a mutual fund consist of the current market value of all these securities. Since the value of these securities fluctuates daily, the NAV of a mutual fund will also vary from day to day.

Expenses incurred by mutual funds can impact the NAV. These expenses may include management salaries, operating expenses, distribution costs, marketing expenses, custodian fees, audit fees, and other operational expenses. In some cases, funds may also incur foreign payments or borrowing costs.

NAV is calculated by subtracting total liabilities from total assets at the market’s close and dividing the result by the total number of outstanding units.

Examples of Mutual Fund NAVs

Here are some examples of NAVs for popular large-cap funds as of May 12, 2021:

Name of Fund	Fund NAV (₹)
Kotak Bluechip Fund	342.63
UTI Mastershare Fund	171.96
Tata Index Sensex Fund	124.75
Mirae Asset Large Cap Fund	70.82
Edelweiss Large Cap Fund	49.75
Quant Focused Fund	51.25
Axis Bluechip Fund	42.82
Canara Robeco Bluechip Equity Fund	38.53
Motilal Oswal Focused 25 Fund	32.77
Nippon India Index Sensex Fund	25.08

What Is the NAV Cut-Off Time?

The NAV cut-off time is the deadline for investing in a mutual fund to receive that day’s end-of-day NAV, provided that other conditions are met. According to the Securities and Exchange Board of India (SEBI), the cut-off time for most mutual fund schemes is 3:00 PM each day, except for liquid and overnight schemes, which have cut-off times of 1:30 PM for subscriptions and 3:00 PM for redemptions.

To qualify for the NAV of a particular day, you must meet two conditions: investing before the cut-off time and having your funds credited to the fund account on that same day. According to rules implemented on February 1, 2021, the NAV assigned is based on the day the funds are actually received by the mutual fund’s account. This applies to all types of investments, including Systematic Investment Plans (SIPs) and lump-sum investments.

Many banks and payment gateways have partnered with Asset Management Companies (AMCs) to enable the real-time transfer of funds. However, if you are trying to capitalize on a market dip with a one-time investment, be sure to check when the money will reach the AMC’s account to ensure you receive the desired NAV.

How Often Do Mutual Funds Update NAV?

SEBI and the Association of Mutual Funds in India (AMFI) require all mutual funds to disclose their latest NAVs daily. After the market closes, the NAV is calculated and must be updated on the AMFI website by 11 PM each day. The fund’s own website must also display the updated NAV. Funds of funds have until 10 AM the next day to update their NAVs.

What Is a Good NAV for a Mutual Fund?

There is no specific “good” or “bad” NAV for a mutual fund. A new mutual fund typically has a lower NAV than an older fund because it has not been in the market long enough to accumulate as many assets. Therefore, comparing a fund’s NAV without considering its age, growth, or performance does not provide a complete picture.

NAV alone is not a reliable indicator of a mutual fund’s performance. It simply reflects the market value of the fund at a particular point in time. Instead of focusing solely on NAV, it is essential to consider other factors such as historical NAV trends, risk-return profile, expense ratio, management strategy, and the fund manager’s track record when evaluating a mutual fund.

Conclusion

The NAV is a critical metric for understanding the price at which you will buy or sell mutual fund units. However, it should not be the only factor considered when evaluating a fund’s performance. A comprehensive approach that includes examining the fund’s risk, return, and other qualitative factors is vital for making informed investment decisions.