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Friday, November 22, 2019

What Is NAV And How It Is Calculated?


NAV is expanded as Net Asset Value (NAV) and it is the market value of a mutual fund unit. In this, the total cost of a mutual fund will be based on this particular value alone per fund unit. Actually what is nav means, adding up all the market value of all the shares in the fund and if you divide it by the number of total mutual fund units. This is what called NAV.

Net Asset Value is the one that is the price per share of the fund. This value is available with share price as like shares. You know even mutual fund is available with net asset value. As in general mutual fund initiates with a unit-cost of Rs. 10 and that alone grows called as fund’s assets.


Notably, the fund that is considered as popular one is provided with net asset value. At the same time net asset value is not the one that depends upon the mutual investment schemes that you have picked. It won’t come in the future as well along with mutual fund scheme. In short it is the total value of the mutual fund scheme investments provided with fewer liabilities and expenses.

If a scheme having much net asset value then either it is available with a longer period or else it is accessible with better aspects. That is why it is important for investors to look at the future growth and investment plan features before going to invest in the mutual fund scheme.

How NAV is calculated?

NAV is calculated in different ways you ought to go with the one that suits your investment fund. Here come the ways to calculate NAV,

General NAV calculation:

This will be calculated per unit for example, you would have invested Rs. 5000 in a fund means you want to pay Rs. 500 NAV means then you will have 10 units. When comes to equity it depends upon the total cost of all the shares.  

Daily NAV calculation:

The mutual fund companies will calculate portfolio once after the stock market gets closed at 3.30 P.M on every day. On the next day, the market will initiate by means of the previous day’s closing share prices. At the same time the fund house will deduct all the liabilities. In this the NAV will be calculated as

Net Asset Value = [Assets – (Liabilities + Expenses)] / Number of outstanding units.

Most of the investors assume that the NAV value is the same as the stock price. That is why all choose a mutual investment plan with low NAV by thinking it is affordable. But the thing is low NAV value alone decides the mutual fund performance.

 You need to look at all the things such as benefits, gain, and returns. Only after investing it all you need to choose a fund. Along with you ought to have an eye on what is nav and how much it is calculated for the particular plan you have picked.

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