Decoding NAV: Understanding Mutual Fund Valuation
NAV, or Net Asset Value, represents the per-unit market value of a mutual fund. It is determined by dividing the total assets minus liabilities by the number of outstanding units. While not an indicator of potential returns, NAV helps investors track growth and determine entry and exit prices.
- Country:
- India
In the intricate world of mutual funds, understanding the term 'Net Asset Value' (NAV) is crucial. It denotes the per-unit market value of a mutual fund scheme, appearing in fact sheets and scheme listings.
Calculated by the formula NAV = (Total Assets – Total Liabilities) / Number of Outstanding Units, NAV provides a daily snapshot based on closing market prices. Though it fluctuates and offers no direct insight into fund performance, NAV aids in determining the purchase and redemption price of mutual fund units.
For an investor, NAV is akin to a cake's price per slice; it tells how the NAV has fared over time. Whether equity, debt, or liquid funds, understanding NAV's behavior across different fund types can illuminate an investor's path in a volatile market.
(With inputs from agencies.)
Google News