NAV is a shorthand for Net Asset Value, which is the value of each unit in a mutual fund scheme. It is calculated by dividing total value of the assets held by the mutual fund scheme less any liabilities, by the number of units outstanding.
A mutualfund NAV Value is calculated at the end of each business day and is based on what the prices were at closing for securities owned by the scheme. The NAV of a mutual fund is therefore a symbol of the value that is market-based for the fund’s assets.
For instance, if the total value of the assets that are held by an investment scheme for mutual funds is Rs. 100 crore and the number of units remaining exceeds 10 million, the NAV in the scheme is the sum of Rs. 10 per unit.
Investors use NAV to gauge the investment performance of mutual funds. A higher NAV indicates that the fund’s base assets have increased in value, while having a lower NAV indicates a decrease on the worth of base assets. It is important to keep in mind however that the NAV does not include any charges or expenses charged by the fund such as management fees or cost of transactions.
The NAV (Net Asset Value) of a mutual fund is calculated by dividing the net assets of the mutual fund in proportion to the amount of units in circulation. Here are the steps you must follow to determine the NAV of mutual funds:
-
Determine the total value of the assets of the mutual fund This encompasses the fair market value for all stocks, bonds, and other securities held by the mutual fund in addition to all cash, cash equivalents or other cash assets.
-
Take out any liabilities These include any costs or charges owed by the mutual fund such as management fees, administrative costs, as well as other costs.
-
The net asset is divided by the amount of units outstanding: This will give you an estimate of the NAV by unit for the mutual fund.
For instance, if the mutual fund has net assets worth 100 crore, or Rs. 100 crore, and the amount of units that are outstanding exceeds 10 million, the net asset value per unit for that mutual fund will be the amount of Rs. 10.
NAV = (Total value of assets minus Total value of liabilities) NAV = (Total value of assets – Total value of liabilities) in outstanding
It is important to note this: the NAV of a mutual fund is calculated at the end of each business day, based on closing prices of the securities owned by the fund, and can fluctuate based on market movements and changes in the value of the underlying assets.
Also check:
