Net Asset Value (NAV) is the per-unit price of a mutual fund scheme. It’s calculated as:
NAV = (Total Market Value of Assets – Liabilities) ÷ Total Number of Units Outstanding
In the above formula, assets include the market value of all investments held by the mutual fund scheme, while liabilities are expenses, management fees and any outstanding payable by the fund. NAV is calculated at the end of each trading day and hence mutual fund units are priced only once daily. NAV changes daily based on market fluctuations and helps in calculating the market value of investment done in a particular mutual fund scheme. NAV is important for determining how many units you get when you invest or what you receive when you redeem/withdraw from a mutual fund scheme.
