What Is NAV in Mutual Funds? Full Form, Meaning and Calculation

A mutual fund’s NAV is one of the first numbers investors notice. It tells you the value of each unit in a scheme on a particular date and is used to allot or redeem units. Yet NAV is often read like a share price. A lower NAV may appear cheaper, while a higher NAV may seem more expensive. Neither assumption is correct. Understanding the NAV full form, calculation and practical use can help you read mutual fund information with greater clarity.

What is Net Asset Value (NAV)?

Net Asset Value in mutual funds is the value of a scheme’s assets after deducting its liabilities, expressed on a per-unit basis.

A mutual fund pools money from investors and places it in shares, bonds, money market instruments or other permitted assets, depending on the scheme. The value of these investments, along with cash, accrued income and receivables, forms the scheme’s total assets.

After deducting expenses, payables and other liabilities, the remaining amount is divided by the number of units outstanding. The result is the scheme’s NAV per unit.

For example, if a scheme has an NAV of ₹25, each unit in that plan and option is valued at ₹25 on the relevant NAV date. The figure may rise or fall as the value of the portfolio, income, expenses and liabilities changes.

The figures shown are for illustrative purpose only.

Source: Association of Mutual Funds in India, Net Asset Value

Why is NAV relevant to mutual fund investors?

NAV helps connect the value of a mutual fund’s portfolio with the units held by each investor. It is relevant in several practical situations:

• Unit allotment: The applicable NAV helps determine how many units an investor receives.
• Redemption: The value of redeemed units is calculated using the applicable NAV, subject to any exit load, tax or other applicable deduction.
• Portfolio valuation: Multiplying the units held by the latest NAV gives the current value of the investment before investor-level deductions.
• Performance measurement: The movement in NAV between two dates can be used to calculate the scheme’s point-to-point return.
• Regular disclosure: Published NAV data allows investors to follow the changing per-unit value of a scheme.

NAV is useful, but its absolute level is not a rating of the fund. It does not tell you by itself whether a scheme is suitable, fairly valued or likely to deliver higher returns.

How to calculate NAV in mutual funds

The mutual fund NAV formula is:

NAV per unit = (Total assets – Total liabilities) / Total units outstanding

The same NAV calculation may be shown in greater detail as:

NAV per unit = (Market value of investments + cash + accrued income + receivables – liabilities and accrued expenses) / Total units outstanding

Components included in mutual fund NAV

A mutual fund NAV calculation generally considers:

• Market value of investments: The value of shares, bonds and other securities held by the scheme.
• Cash and cash equivalents: Money held in bank accounts or short-term permitted instruments.
• Accrued income: Interest, dividends or other income earned but not yet received.
• Receivables: Amounts due to the scheme.
• Liabilities and accrued expenses: Fees, payables and other amounts owed by the scheme.
• Units outstanding: The total number of scheme units currently held by investors.

NAV calculation example

Assume a mutual fund scheme has:

• Market value of investments: ₹48 crore
• Cash, accrued income and other assets: ₹2 crore
• Liabilities and accrued expenses: ₹1 crore
• Outstanding units: 5 crore

Using the NAV formula:

• NAV = (₹50 crore – ₹1 crore) / 5 crore units
• NAV = ₹9.80 per unit

This means that each outstanding unit is valued at ₹9.80 for that calculation date.

The figures shown are for illustrative purpose only.

How NAV determines your mutual fund units

Your investment amount and the applicable NAV together determine the number of units allotted:

Units allotted = Amount available for investment / Applicable NAV

Suppose ₹10,000 is available for investment and the applicable NAV is ₹20. Ignoring stamp duty and other applicable adjustments for this illustration:

Units allotted = ₹10,000 / ₹20 = 500 units

If the applicable NAV were ₹25, the same amount would provide 400 units. Receiving fewer units at a higher NAV does not automatically place the investor at a disadvantage because each unit also has a higher value.

The value of an existing investment can be estimated as:

Current investment value = Units held x Current NAV

The figures shown are for illustrative purpose only.

Which NAV applies when you invest or redeem?

The applicable NAV is the NAV used to process a purchase, redemption or switch. It may not be the NAV visible when the transaction is submitted.

For purchases in schemes other than liquid and overnight funds, SEBI rules generally apply the closing NAV of the day on which the money becomes available for use by the scheme. To receive that day’s NAV, both the application and the funds must reach the scheme before the applicable cut-off time. The cut-off for credit of funds is generally 3:00 p.m.

For redemptions from schemes other than liquid and overnight funds:

• An application received by 3:00 p.m. on a business day generally receives that business day’s closing NAV.
• An application received after 3:00 p.m., or on a non-business day, generally receives the next business day’s closing NAV.

Liquid and overnight funds follow different cut-off and applicable NAV rules. International schemes and transactions undertaken through a recognised stock exchange may also be subject to separate provisions.

For an SIP, each instalment is treated as a separate investment. Therefore, the answer to what is NAV in SIP depends on the NAV applicable when each instalment is processed. The number of units received can vary from one instalment to the next.

Source: SEBI Master Circular for Mutual Funds, 20 March 2026

When is mutual fund NAV calculated and published?

Mutual fund NAV is calculated after the scheme’s assets and liabilities have been valued for the relevant day. It does not usually move continuously during market hours like the price of a listed share.

Under the SEBI disclosure timelines applicable as of 20 March 2026:

• Fund of Funds schemes must disclose NAV by 10:00 a.m. on the following business day.
• Schemes with exposure to exchange-traded commodity derivatives must disclose NAV by 9:00 a.m. on the following calendar day.
• Other schemes must disclose NAV by 11:00 p.m. on the same business day.

These timings describe when the NAV must be published. They do not change the rules used to determine which NAV applies to a transaction.

Source: SEBI Master Circular for Mutual Funds, 20 March 2026

What is the role of NAV in mutual fund performance?

A change in NAV shows how the per-unit value of a particular plan and option has moved. If the NAV of a Growth option rises from ₹20 to ₹22, the increase is 10%.

However, the absolute NAV cannot be used to compare two funds without context. One scheme may have a higher NAV because it has existed longer, retained gains over time or had a different starting date.

NAV also needs to be interpreted carefully for an IDCW option. After an Income Distribution cum Capital Withdrawal payout, the NAV generally falls to the extent of the distribution and applicable statutory levy, if any. Looking only at the starting and ending NAV may therefore understate the total return received by the investor.

Is a higher or lower NAV better?

Neither is automatically better. A high NAV mutual fund is not necessarily expensive, and a scheme with a low NAV is not necessarily cheap.

Consider two hypothetical schemes:

Scheme A provides more units because its NAV is lower, but each unit is also worth less. If both schemes rise by the same percentage, the value of both investments changes by the same percentage.

Rather than choosing a fund because of its NAV, investors may examine its objective, portfolio, risk level, expense ratio, benchmark and performance over relevant periods.

The figures shown are for illustrative purpose only.

Are NFOs cheaper because they start at ₹10?

An NFO may offer units at a face value of ₹10, but that does not make it cheaper than an existing scheme with a higher NAV.

Suppose an investor places ₹10,000 in an NFO at ₹10 and another ₹10,000 in an existing scheme at an NAV of ₹100:

• The NFO would provide 1,000 units before applicable adjustments.
• The existing scheme would provide 100 units.
• If both investments subsequently increased by 10%, each would be worth ₹11,000.

The number of units differs, but the percentage movement determines the change in investment value. The two schemes may also have different portfolios, strategies, costs and risk levels, so the starting NAV is not a meaningful basis for deciding between them.

The figures shown are for illustrative purpose only.

How to calculate mutual fund returns using NAV

An NAV return shows how the per-unit value has changed over a selected period. The appropriate calculation depends on the holding period, plan, option and pattern of investment.

Point-to-point NAV return formula

For a Growth option with no additional transactions during the period:

Point-to-point NAV return (%) = [(Ending NAV – Beginning NAV) / Beginning NAV] x 100

The beginning and ending values must belong to the same scheme, plan and option.

Worked NAV return example

Assume:

• Beginning NAV: ₹100
• Ending NAV: ₹112

The calculation would be:

NAV return = [(₹112 – ₹100) / ₹100] x 100 = 12%

The NAV return meaning in this example is that the per-unit value increased by 12% between the two selected dates. The result may change if either date changes.

The figures shown are for illustrative purpose only.

Annualised returns for longer periods

For a lumpsum investment held for more than one year, the return is commonly annualised using Compound Annual Growth Rate:

CAGR = [(Ending value / Beginning value)^(1 / Number of years) – 1] x 100

CAGR expresses the total change as an equivalent compounded annual rate. It does not mean the investment earned the same return in every year.

For SIPs or investments involving several purchases, withdrawals or other cash flows on different dates, XIRR may provide a more relevant view of the investor’s annualised return.

Accounting for IDCW when measuring returns

A basic NAV-to-NAV calculation may not capture the complete return of an IDCW option because distributions reduce its NAV.

To assess the option more meaningfully, IDCW payouts should be included in the return calculation. For this reason, returns for Growth and IDCW options should not be compared solely through their ending NAVs.

Factors that may influence NAV

NAV changes as the value of the scheme’s assets, income, expenses and liabilities changes. Key influences include:

• Portfolio prices: Movements in the market value of shares, bonds and other holdings can raise or lower NAV.
• Interest and dividend income: Income earned by the portfolio adds to the scheme’s assets.
• Scheme expenses: Permitted recurring expenses are deducted before NAV is declared.
• Realised gains or losses: Selling portfolio holdings may produce gains, losses and transaction costs.
• Interest-rate movements: Changes in market interest rates can affect the valuation of debt securities.
• Currency movements: Exchange-rate changes can influence schemes holding overseas assets.
• Liabilities and payables: A change in amounts owed by the scheme can affect its net assets.
• IDCW distributions: A payout generally leads to a corresponding reduction in the NAV of that option.

Fresh investments do not automatically increase NAV. A purchase generally adds money to the scheme while also increasing the number of units outstanding.

Why do direct and regular plans have different NAVs?

Direct and Regular plans of the same scheme invest in the same underlying portfolio and follow the same investment objective. However, they have separate expense structures and separate NAVs.

A Regular plan includes distribution-related expenses or commissions within its permitted expense ratio. A Direct plan does not include these distribution expenses. The difference in expenses can cause their NAVs and returns to diverge over time.

When checking the NAV of a mutual fund today, make sure the plan name matches the investment you hold. A Direct plan NAV should not be compared with a Regular plan NAV as though they were the same option.

Why do Growth and IDCW options have different NAVs?

A Growth option keeps income and gains within the scheme, allowing them to remain reflected in its NAV.

An IDCW option may distribute a portion of the scheme’s distributable surplus. When a payout is made, the option’s NAV generally falls to the extent of the distribution and applicable statutory levy, if any.

This difference does not mean one option has performed better merely because its NAV is higher. The distributions received under the IDCW option must also be considered.

NAV vs other performance measures

NAV tells you the per-unit value of a scheme on a particular date. Other measures answer different questions:

NAV is therefore one part of the picture. It can help value an investment, while performance and risk measures provide additional context.

Past performance may or may not be sustained in future.

NAV vs ETF market price

An ETF has both an NAV and an exchange-traded market price:

• ETF NAV represents the per-unit value of the underlying portfolio after accounting for liabilities.
• Market price is the price at which ETF units are bought or sold on a stock exchange.
• Indicative NAV, or iNAV, is a periodically updated reference value published during trading hours.

Demand, supply, liquidity and bid-ask spreads can cause an ETF’s market price to trade above or below its NAV. The iNAV is also not the same as the official end-of-day NAV or the traded market price.

How to check the current NAV of a mutual fund

Investors looking for the current NAV may check:

• The relevant scheme page on the mutual fund house’s official website
• The AMC’s historical NAV section
• Daily NAV data published by AMFI
• Their official account statement or investment platform

For Bajaj AMC schemes, current information is available on the relevant scheme pages, while previous values can be viewed through the Bajaj AMC Historical NAV page. NAV data reported by mutual fund houses is also available through AMFI.

While learning how to check NAV of mutual fund holdings, match the complete scheme name, plan and option. Direct, Regular, Growth and IDCW variants have separate NAVs.

Common misconceptions about NAV

NAV is easy to misread, especially when comparing schemes or tracking returns. Here are some common misconceptions and the facts behind them:

A lower NAV means a mutual fund is cheaper

A lower NAV provides more units for the same investment amount, but each unit also has a lower value. It does not indicate that the portfolio is undervalued.

A higher NAV means better past performance

A higher NAV may reflect the scheme’s age, retained gains, distribution history or starting value. Historical returns should be calculated over comparable periods instead.

More investors joining a fund increases its NAV

Fresh investment usually increases both the scheme’s assets and the number of units outstanding. Inflows alone do not create a rise in NAV.

Mutual fund NAV changes continuously during the day

The official NAV of a conventional open-ended mutual fund is normally calculated after the portfolio is valued for the applicable day. ETF market prices are different because they move during exchange trading hours.

Direct and Regular plans have the same NAV

They hold the same underlying portfolio but have different expense structures. Their NAVs and historical returns can therefore differ.

NAV return always equals the investor’s return

An investor’s return may be affected by transaction dates, SIP instalments, withdrawals, exit load, taxation and distributions. XIRR may be more suitable where several cash flows are involved.

Conclusion

NAV represents the per-unit value of a mutual fund scheme after its liabilities have been deducted. It determines unit allotment and redemption values and can be used to calculate changes in the value of a scheme over time.

A high or low NAV does not show whether a fund is cheap, expensive or suitable. A more meaningful assessment considers the scheme’s investment objective, portfolio, risk, expense ratio, benchmark and returns over relevant periods.

FAQs

What is the NAV full form?

The NAV full form is Net Asset Value. In a mutual fund, it represents the value of the scheme’s net assets on a per-unit basis.

What affects the NAV of a mutual fund?

Portfolio valuations, interest and dividend income, scheme expenses, realised gains or losses, currency movements, liabilities and IDCW distributions can affect a mutual fund’s NAV.

Does NAV return include expense ratios and other charges?

Returns calculated from published NAVs already reflect recurring scheme expenses, including the applicable expense ratio. Investor-level deductions such as exit load and tax are not built into NAV. Stamp duty reduces the amount available for unit allotment rather than being deducted while calculating the published NAV.

How often is a fund’s NAV updated and published?

NAV is generally calculated for each business day. Under the current SEBI timelines, most schemes must disclose NAV by 11:00 p.m. on the same business day. Fund of Funds and schemes with exposure to exchange-traded commodity derivatives have different disclosure timelines.

Can a fund have a negative NAV return?

Yes. An NAV return can be negative when the ending NAV is below the beginning NAV. For an IDCW option, the effect of distributions should also be included before interpreting total return.

Is NAV important for mutual fund selection?

NAV is important for valuing and transacting in mutual fund units, but its absolute level is not a useful selection criterion. The scheme’s objective, portfolio, risk, costs, benchmark and historical performance offer more relevant information.

What is the difference between point-to-point NAV return and annualised NAV return?

A point-to-point return shows the total percentage change between two dates. An annualised return expresses the change as an equivalent yearly compounded rate, commonly through CAGR for a multi-year lumpsum investment.

Should you invest in a mutual fund with a high NAV?

A high NAV alone is neither a reason to invest nor a reason to avoid a scheme. It affects the number of units received, not the percentage return potential. The decision should be based on the scheme’s suitability for the investor’s goal, time horizon and risk appetite.

Is higher NAV better or lower NAV?

Neither is inherently better. If two investments earn the same percentage return, their values change by the same percentage even if their starting NAVs are different.

Is NAV the same as the total market value of a mutual fund?

No. The scheme’s net assets represent its total assets after liabilities. NAV expresses this net value per outstanding unit. For an ETF, the exchange-traded market price is another separate figure.

What is an NAV date?

The NAV date is the date to which a published NAV relates. The applicable NAV date for a transaction depends on the scheme type, the transaction time and, for purchases, when the money becomes available to the scheme.

Do all SIP instalments receive the same NAV?

No. Each SIP instalment receives the NAV applicable on its processing date. Since NAV can change between instalments, the number of units allotted may also vary.

Where can I find official NAV data for Bajaj AMC funds?

The latest NAV can be checked on the relevant scheme page or NAV section of the Bajaj AMC website. Previous values are available through the Bajaj AMC Historical NAV page. AMFI also publishes NAV data reported by mutual fund houses.