What Is NAV (Net Asset Value)?
NAV (Net Asset Value) is the per-unit value of a mutual fund — the total value of its holdings minus liabilities, divided by the number of units. When you invest, you buy units at the applicable NAV; your returns come from how that NAV changes over time, not from whether it is high or low.
Why NAV matters
NAV is how your mutual fund investment is priced, so understanding it clears up a common and costly myth: that a fund with a lower NAV is “cheaper” and better value. It is not — NAV only reflects per-unit value, and returns depend on percentage growth, not the starting number.
What matters is how much the NAV grows, which comes from the fund’s underlying performance — not whether you bought at a NAV of ₹15 or ₹150.
How NAV works
Each business day, the fund values all its holdings, subtracts expenses and liabilities, and divides by the total units outstanding to get the NAV. When you invest ₹10,000 into a fund with a NAV of ₹100, you get 100 units; if the NAV later rises to ₹120, your units are worth ₹12,000 — a 20% gain. A fund with a NAV of ₹500 that rises 20% gives exactly the same return. The percentage change is what counts.
A real Indian example of NAV
Two funds each grow 12% this year. Fund A has a NAV of ₹20; Fund B has a NAV of ₹200. Investing ₹20,000 in either gives you the same ₹2,400 gain, because both grew 12% — you simply own more units of Fund A and fewer of Fund B. The NAV number is not a “price tag” that makes one a better buy; only the growth rate and the fund’s quality matter.
Benefits
Common mistakes
Best practices
Frequently asked questions about NAV
What is NAV in a mutual fund?
NAV (Net Asset Value) is the per-unit value of a fund — its total assets minus liabilities, divided by the number of units. You buy and redeem units at the applicable NAV, and your returns come from how it changes.
Is a lower NAV better?
No. A lower NAV does not make a fund cheaper or better. Two funds growing at the same percentage give the same return regardless of their NAV; you just own more units of the lower-NAV one. Judge funds on performance and cost.
How is NAV calculated?
Add up the market value of all the fund’s holdings, subtract its liabilities and expenses, and divide by the total number of outstanding units. It is calculated once each business day after markets close.
When is NAV updated?
Once every business day, after the markets close and the fund values its holdings. Your buy or sell is processed at the applicable day’s NAV based on cut-off timing rules.
Related terms
Related guides
How BudgetAnalyzer uses this
BudgetAnalyzer lets you record your mutual fund holdings and their value, so as the NAV moves your investments update within your overall net worth picture.
Ready to take control of your money?
Bring every expense, budget and account into one private dashboard — free to start.