What Is NAV? Full Form, Meaning & Calculation

A mutual fund’s NAV is one of the first numbers investors notice, but it is often misunderstood. A rising or falling NAV shows how the scheme’s per-unit value has changed over time, yet the number alone does not tell you whether a fund is cheaper, more suitable or likely to offer higher return potential.

Knowing the NAV full form, what NAV means, how it is calculated and what causes it to change can make mutual fund performance easier to interpret. It also helps place NAV alongside other measures such as CAGR, XIRR, benchmark returns and risk indicators.

What is Net Asset Value (NAV)?

So, what is NAV in practical terms? A mutual fund pools money from several investors and invests it across securities such as shares, bonds or money market instruments, depending on the scheme. The value of these investments, along with cash, receivables and accrued income, forms part of the scheme’s total assets.

After subtracting liabilities and accrued expenses, the remaining value is divided by the number of outstanding units. The result is the scheme’s NAV per unit.

For example, an NAV of ₹25 means that each unit of the mutual fund is valued at ₹25 on that date. NAV is calculated and disclosed for each business day. For certain schemes, it may also be calculated for specified non-business or calendar days, as applicable. It may rise or fall as the value of the scheme’s investments, income, expenses and liabilities changes.

The figures shown are for illustrative purpose only

How to calculate NAV in mutual funds

To understand how to calculate NAV, use the following formula:

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

The main components are:

Total assets: The market value of the scheme’s investments, cash, receivables, accrued interest and other assets.
Total liabilities: Scheme expenses, payables and other amounts owed by the scheme.
Outstanding units: The total number of mutual fund units held by investors.

Illustrative NAV calculation

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

The NAV would be:

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

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

The figures shown are for illustrative purpose only

What is the role of NAV in mutual fund performance?

NAV serves several practical purposes for mutual fund investors:

Shows the value of each unit: Multiplying the number of units held by the current NAV gives the value of the investment before considering any applicable exit load or tax.
Forms the basis of transactions: The applicable NAV is used when units are allotted, redeemed or switched.
Helps track historical movement: Comparing the NAV of the same plan and option across two dates can show how its per-unit value has changed.
Supports return calculations: NAV values may be used to calculate point-to-point returns or CAGR for a lumpsum investment.
Provides valuation transparency: Regular NAV disclosure gives investors an updated view of the scheme’s per-unit value.

NAV itself is not a performance score. A higher NAV does not automatically indicate higher historical returns, and a lower NAV does not mean that a scheme offers greater return potential.

For an IDCW option, comparing only the starting and ending NAV may not show the complete return. After an IDCW payout, the per-unit NAV falls to the extent of the payout and applicable statutory levy, if any. The distribution therefore needs to be included when assessing the option’s total return.

Is a higher or lower NAV better?

There is no single “good NAV” for a mutual fund. The absolute NAV indicates the value of one unit, not whether the fund is undervalued or likely to offer higher potential returns. Consider two hypothetical schemes:

	Scheme A	Scheme B
Initial NAV	₹ 20	₹ 200
NAV after a 10% increase	₹ 22	₹ 220
Investment amount	₹ 10,000	₹ 10,000
Value after the increase	₹ 11,000	₹ 11,000

Scheme A gives the investor more units because its NAV is lower. However, each unit also has a lower value.

In this simplified illustration, if both schemes record the same percentage increase, the value of each investment would increase by the same percentage before applicable costs and taxes.

Investors may instead review factors such as the scheme’s investment objective, portfolio, category, risk level, expense ratio, benchmark comparison and performance across suitable periods. The NAV formula itself also shows why the absolute per-unit value cannot be treated like the valuation of an individual share.

The figures shown are for illustrative purposes only.

Calculate point-to-point NAV return

The point-to-point percentage change in NAV between two dates can be calculated as follows:

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

This formula is most straightforward for a lumpsum investment in the Growth option where no additional purchases or redemptions occur during the selected period.

For an IDCW option, the calculation does not represent total return unless the IDCW distributions are also included. For SIPs or investments involving several cash flows on different dates, XIRR may provide a more relevant measure of the investor’s annualised return.

Components of the NAV return formula explained

The formula contains the following elements:

Beginning NAV: The NAV at the start of the selected period.
Ending NAV: The NAV at the end of the selected period.
Change in NAV: The difference between the ending and beginning NAV.
Selected period: The duration over which the change is being measured.
Distributions, where applicable: IDCW payouts need to be included separately when calculating total return.

The published NAV already reflects scheme-level expenses such as the expense ratio. However, a simple NAV return calculation does not account for investor-level factors such as exit load, taxation or the timing of separate investments and withdrawals.

How to calculate NAV return step-by-step

The following steps can be used to calculate the percentage change in NAV:

Note the beginning NAV: Find the NAV on the first date of the period.
Note the ending NAV: Find the NAV on the last date of the period.
Calculate the change: Subtract the beginning NAV from the ending NAV.
Divide by the beginning NAV: This shows the change relative to the starting value.
Multiply by 100: Convert the result into a percentage.

Illustrative example

Assume a hypothetical growth-option scheme has the following NAV values:

NAV at the beginning of the period: ₹100
NAV at the end of the period: ₹112

Using the formula:

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

The point-to-point NAV change over the selected period is therefore 12%.

This example assumes that no additional investments, withdrawals or IDCW distributions occurred during the period.

The figures shown are for illustrative purpose only

Interpreting long-term performance

A point-to-point return measures the change between one starting date and one ending date. The result may therefore differ when either of these dates changes.

For multi-year lumpsum periods, performance is commonly expressed through the Compound Annual Growth Rate, or CAGR. It expresses the overall change as an equivalent annual compounded rate. The investment’s actual return may have varied from year to year.

However, CAGR does not show the actual year-by-year journey of the investment. It also does not indicate how much the value fluctuated during the period.

Other measures may be more relevant in different situations:

XIRR may be used for SIPs or investments involving multiple cash flows.
Rolling returns may help review performance across several overlapping periods.
Standard deviation may help indicate how widely returns have fluctuated.
Benchmark comparison may provide context on the scheme’s relative historical performance.
Sharpe ratio may help assess the excess return over the risk-free rate in relation to the volatility of returns.

Past performance may or may not be sustained in future

Factors that may influence NAV

NAV may change because of movements in the assets and liabilities of the scheme. Some key influences include:

Market value of portfolio holdings: Changes in the prices or valuations of the securities held by the scheme can raise or lower its total asset value.
Interest and dividend income: Interest, dividends and other income accrued by the scheme form part of its assets.
Scheme expenses: Management fees and other permissible expenses are deducted before the NAV is declared.
Realised gains or losses: Buying and selling portfolio securities may result in gains, losses and transaction-related costs.
Currency movements: For schemes holding overseas assets, exchange-rate changes may affect their rupee value.
Liabilities and payables: Changes in accrued expenses or other amounts payable can affect the scheme’s net assets.
IDCW distributions: A distribution generally leads to a corresponding reduction in the NAV of the IDCW option.

Ordinary purchases and redemptions generally change both the scheme’s assets and its outstanding units. Therefore, more investors joining a scheme does not automatically increase its NAV.

How to check the current NAV of a mutual fund

The current or historical NAV of a mutual fund can generally be checked through:

The scheme page on the mutual fund house’s official website
The historical NAV section of the AMC’s website
The daily NAV data published by the Association of Mutual Funds in India
Account statements or the official investment platform used for the transaction

While checking the NAV, make sure that the complete scheme details match. Direct and Regular plans, as well as Growth and IDCW options, have separate NAVs. On the Bajaj AMC website, NAV information is available through the relevant scheme pages and the Historical NAV section.

NAV vs. other performance metrics

NAV tells investors the per-unit value of a scheme on a particular date. Other measures serve different purposes:

Measure	What it may help show
NAV	Per-unit value of the scheme on a particular date
Point-to-point return	Percentage change between two selected dates
CAGR	Annualised growth rate for a multi-year lumpsum period
XIRR	Annualised return where investments or withdrawals occur on different dates
Rolling returns	Performance across multiple overlapping periods
Standard deviation	The extent to which returns have fluctuated
Sharpe ratio	Excess return over the risk-free rate per unit of volatility
Benchmark comparison	How the scheme performed relative to its stated benchmark
Expense ratio	Ongoing scheme expenses that are reflected in the NAV

A mutual fund assessment may therefore consider several measures rather than relying only on the absolute NAV or a single return figure.

Common misconceptions about NAV

Net Asset Value (NAV) can occasionally be misunderstood when investors assess mutual fund schemes. While NAV reflects the per-unit value of a scheme on a given business day, it does not by itself indicate performance quality or future return potential. Clarifying misconceptions may support more informed investment decisions. Some common ones include:

Lower NAV means cheaper investment: A lower NAV does not mean the scheme is inexpensive or offers higher potential returns. Returns depend on percentage growth in NAV, not the absolute starting value.
Higher NAV indicates better performance: A higher NAV may simply reflect longer operational history or accumulated gains. It does not automatically indicate superior performance relative to other schemes.
New fund offers are more beneficial due to lower NAV: During a New Fund Offer (NFO), units are typically offered at ₹10. This does not make the scheme more favourable compared to an existing scheme with a higher NAV. Portfolio quality and strategy matter more than the starting NAV.
NAV remains relatively steady in all fund categories: NAV fluctuates daily based on the underlying portfolio.

Past performance may or may not be sustained in future.

A new fund with an NAV of ₹10 is cheaper

An NFO commonly begins with a specified face value, often ₹10 per unit. This does not make it cheaper than an existing scheme with a higher NAV. The two schemes may have entirely different portfolios, objectives and risk profiles.

More investors joining a fund automatically increases its NAV

When fresh money enters a scheme, its assets and outstanding units generally increase together. Investor inflows alone do not automatically create a gain in NAV.

NAV moves throughout the day like a share price

The market price of a listed share may change throughout trading hours. For a conventional open-ended mutual fund scheme, the official NAV is calculated after the scheme’s assets and liabilities are valued for the applicable day.

ETFs are different because their units trade on a stock exchange at market prices during trading hours. This market price may be above or below the ETF’s official NAV. An indicative NAV, or iNAV, may also be published during the day, but it is not the same as the traded market price or the official end-of-day NAV.

Direct and Regular plans have the same NAV

Direct and Regular plans of the same scheme have separate NAVs. Their expense structures differ, which can lead to a difference in NAV and historical returns over time.

NAV return is always the same as an investor’s return

An investor’s return can differ because of the dates and amounts of individual transactions, SIP instalments, withdrawals, exit loads and taxation. XIRR may be more relevant when several cash flows are involved.

Conclusion

NAV represents the per-unit value of a mutual fund scheme and forms the basis for unit allotment, redemption and portfolio valuation. Its movement across dates can provide information about historical performance, particularly for a growth-option lumpsum investment.

However, a high or low NAV does not indicate whether a scheme is more suitable or offers higher return potential. It may be considered alongside the scheme’s investment objective, portfolio, risk, expenses, benchmark and performance measures such as CAGR, XIRR and rolling returns.

FAQs

Does NAV return include expense ratios and other charges?

Yes. Returns calculated using the published NAV already reflect scheme-level expenses, including the expense ratio. However, investor-level costs such as exit load, taxes and stamp duty are not included in the NAV. Stamp duty reduces the amount used to allot units.

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

A mutual fund’s NAV is generally calculated and published once every business day after the scheme’s investments have been valued. The applicable disclosure timeline may vary for certain scheme categories.

Can a fund have a negative NAV return?

Yes. A negative point-to-point NAV return means that the ending NAV is lower than the beginning NAV. For an IDCW option, the NAV may also fall after a distribution, so the payout must be included when assessing the scheme’s total return.

Is NAV important for mutual fund selection?

NAV is important for valuing mutual fund units, but a high or low NAV does not indicate whether a scheme is more suitable. Investors may also consider the scheme’s objective, portfolio, risk level, expenses, benchmark and historical performance.

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

Point-to-point NAV return shows the total percentage change between two selected dates. Annualised return expresses the overall change as an equivalent yearly compounded rate, generally using CAGR for a lumpsum investment held for more than one year.

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. Historical data is available on the Bajaj AMC NAV History page. AMFI also provides current and historical NAV data reported by mutual fund houses.

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

No. NAV is the net value of a mutual fund scheme’s assets after liabilities, expressed on a per-unit basis. It is different from the scheme’s total asset value. For an ETF, the exchange-traded market price may also be higher or lower than its NAV.