What is NAV?
NAV is the per-unit value of a mutual fund, showing the value of the fund’s assets after deducting liabilities.
Start the lessonIntroduction
One unit, one value
In a mutual fund, NAV stands for Net Asset Value. It tells you the value of one unit of the fund, based on the total value of the portfolio minus liabilities, divided by the number of outstanding units.
The short answer
NAV is the price of one mutual fund unit at a given point in time. It changes as the fund’s investments rise or fall in value.
Why it matters
It helps you track the fund’s value
Unit tracking
NAV tells you the value of each unit you own in a mutual fund.
Portfolio value
It changes as the securities inside the fund move in price.
Decision support
Investors use NAV to monitor value, but they should also consider returns and risk.
Simple formula
Calculate the per-unit value
NAV = (Fund value - Liabilities) / Outstanding units = ₹22.5 per unit.
Here, the total net assets are ₹4,50,000, so the fund value per unit is shown above.
Common mistakes
NAV is useful, but it is not the whole story
Assuming lower NAV means cheaper or better
A lower NAV does not automatically indicate a superior investment. It simply reflects the per-unit value at a point in time.
Treating NAV as guaranteed future return
NAV can go up or down based on market conditions and fund performance.
Ignoring expense ratio and risk
Fund costs and risk levels matter as much as the per-unit price.
Forgetting that exact value changes daily
NAV is a moving figure and should be assessed over time, not just in isolation.
Key points
What to remember
- NAV = (Fund assets - liabilities) / total units.
- It tells you the per-unit value of a mutual fund.
- NAV changes as underlying investments change in value.
- Lower or higher NAV does not automatically mean better or worse.
- Consider risk, objective, and performance history alongside NAV.
- NAV is useful for tracking value, not predicting the future.
This lesson is educational. NAV is a valuation metric and does not guarantee returns or indicate investment quality on its own.
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