Net Asset Value (NAV)

The Net Asset Value (NAV) represents the per-unit market value of a mutual fund scheme. It reflects the fair value of all the assets held by the fund (such as shares, bonds, or other securities) minus its liabilities, divided by the total number of outstanding units. NAV is calculated at the end of each trading day and serves as the price at which investors can buy or sell mutual fund units. NAV is crucial for determining the performance of a mutual fund and for computing capital gains when units are redeemed or sold. The difference between the sale NAV and the purchase NAV indicates the investor’s gain or loss. Example: An investor purchases mutual fund units worth ₹10 lakh when the NAV is ₹100 per unit (10,000 units). Later, when the NAV rises to ₹120 per unit, the value of the investment becomes ₹12 lakh. Upon sale, the investor realizes a capital gain of ₹2 lakh (₹12 lakh – ₹10 lakh).