If you’re planning to invest in mutual funds or already have, there’s one term you’ll often come across—mutual fund NAV. Understanding it can help you make smarter investment choices, compare funds, and better track your returns. But what exactly is NAV, and how does it impact your investments?
This guide will break it all down in simple, everyday language—no jargon, no confusion. Let’s dive in.
What Is Mutual Fund NAV?
NAV stands for Net Asset Value, and in the world of mutual funds, it refers to the price per unit of the fund. Think of it like the price tag of a mutual fund at any given point.
It’s calculated daily and represents the total value of a fund’s assets (stocks, bonds, cash) minus its liabilities, divided by the number of outstanding units.
In simple words:
If you’re buying one unit of a mutual fund, NAV is the price you’ll pay. If you’re selling it, NAV is the price you’ll receive (subject to exit loads or charges, if any).
How Is Mutual Fund NAV Calculated?
The calculation of NAV in mutual funds follows this formula:
Here’s a real-life example:
Suppose a mutual fund has:
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Total assets worth ₹100 crore (stocks, bonds, cash)
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Liabilities of ₹2 crore (expenses, fees, etc.)
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10 crore units outstanding
Then:
So, the NAV per unit in mutual funds would be ₹9.80 for that day.
Why NAV Matters to Investors
Many new investors believe that a lower NAV means a cheaper or better fund. That’s not true.
What NAV really tells you:
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The current value of your investment.
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The unit price at which you can buy or redeem the fund.
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A snapshot of the fund’s asset value at a given time.
In other words, NAV helps you track how your money grows in the fund.
How NAV Affects Mutual Fund Returns
This is where it gets interesting.
Let’s clear a common myth:
“Lower NAV = Higher returns” – False
The returns of a mutual fund are based on the growth in NAV, not its starting value.
For example:
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Fund A starts at ₹10 NAV and grows to ₹15 → 50% return
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Fund B starts at ₹100 NAV and grows to ₹150 → 50% return
So, whether the NAV is low or high, what matters is how much it grows over time.
✅ Key Insight:
The impact of NAV on mutual fund performance is about tracking growth, not picking the lowest NAV.
NAV Growth in Mutual Funds: How to Monitor It
To understand your investment’s progress, you need to check the NAV growth regularly.
Most fund houses update the daily mutual fund prices (NAV) on their websites or via third-party apps like:
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Moneycontrol
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Groww
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Zerodha Coin
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ET Money
By comparing the current NAV to your purchase NAV, you can calculate your gains or losses.
Formula:
Fund NAV vs Market Price: Is There a Difference?
Unlike stocks that trade on exchanges and fluctuate by the minute, mutual funds are not traded like shares.
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Fund NAV is updated once per day, after the market closes.
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There’s no “market price” for mutual funds like there is for stocks.
So, while you may hear people say “mutual fund price,” they’re actually referring to the NAV.
NAV Comparison of Mutual Funds: What to Look For
If you’re comparing two funds, don’t just look at their NAV. Instead, focus on:
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Historical returns (over 1, 3, 5 years)
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Expense ratio
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Portfolio quality
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Fund manager track record
Remember:
A fund with a higher NAV may have simply been in existence longer—it doesn’t mean it’s expensive or better.
Understanding NAV in Different Types of Mutual Funds
🔹 Equity Fund NAV
Equity funds invest mainly in stocks, so their NAV is more volatile. It can go up or down depending on stock market movements.
🔸 Debt Fund NAV
Debt funds invest in fixed-income securities like bonds. Their NAV tends to be more stable, with lower daily fluctuations.
📊 Real-World Scenario:
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Equity fund NAV may move from ₹50 to ₹55 in a week due to a market rally.
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Debt fund NAV may go from ₹10.20 to ₹10.30 in the same time.
This shows the difference in risk and growth potential.
Mutual Fund Performance Indicators Beyond NAV
While NAV is important, it’s just one part of the puzzle. Other key performance indicators include:
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CAGR (Compound Annual Growth Rate)
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Standard Deviation (for risk)
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Sharpe Ratio (risk-adjusted returns)
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AUM (Assets Under Management)
NAV tells you where the fund is today, but not necessarily how well it’s performing in relative terms.
When Does the NAV Get Updated?
The daily NAV of mutual funds is updated after market closing, usually by 9 PM IST on business days.
You can find the current NAV of mutual fund schemes on:
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AMC (Asset Management Company) websites
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AMFI (Association of Mutual Funds in India)
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Popular financial platforms
Does NAV Decide the Number of Units You Get?
Yes. When you invest in a mutual fund, the amount you invest is divided by the NAV to determine how many units you receive.
Example:
You invest ₹5,000 in a fund with NAV ₹50:
So your unit value in mutual funds is directly influenced by NAV.
📘 Conclusion: NAV Helps You Track, Not Predict
While mutual fund NAV plays a vital role in showing the price and value of your fund units, it’s not the only metric you should rely on.
Use NAV to:
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Monitor your investment growth
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Compare purchase and current values
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Understand the fund’s performance trajectory
But for making investment decisions, always look at the bigger picture: fund category, historical returns, risk level, and your own goals.
📌 FAQs: Smart Investor Queries on Mutual Fund NAV
1. What is mutual fund NAV and why is it important?
NAV (Net Asset Value) is the per-unit price of a mutual fund. It tells you the current value of your investment and helps you track returns.
2. How does NAV affect mutual fund returns?
Returns are calculated based on NAV growth. A higher or lower NAV doesn’t determine performance—growth over time does.
3. Is a lower NAV better when choosing a fund?
Not necessarily. A low NAV doesn’t mean it’s cheaper or better. Focus on past returns, fund quality, and risk profile instead.
4. How often is the NAV updated?
The NAV of mutual funds is updated once a day, typically after the market closes on business days.
5. Where can I check the current NAV of mutual funds?
You can check daily NAVs on AMC websites, AMFI India, and platforms like Groww, Zerodha, or Moneycontrol.
6. Does NAV differ for equity and debt funds?
Yes. Equity fund NAVs are more volatile due to market movements. Debt fund NAVs are more stable, reflecting bond market performance.
7. How is NAV different from market price in investing?
Mutual funds don’t have a market price like stocks. The NAV is calculated daily and represents the fund’s unit value, not a fluctuating traded price.
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