How a NAV is calculated, and why it is the wrong number to compare
A fund at ₹12 is not cheaper than one at ₹600. The NAV is a unit of measurement, not a price tag — and the confusion costs people money.
Net Asset Value is the one number every fund publishes daily, and the one most often misread.
The arithmetic
At the end of each business day the fund adds up what it owns at closing prices, subtracts what it owes including the day's share of the expense ratio, and divides by the number of units outstanding.
NAV = (assets − liabilities) ÷ units
That is all it is. No forecast, no opinion, no valuation model — just today's closing prices, divided.
Once a day, after the market closes
A stock price moves every second. A NAV is struck once, after markets close, and published in the evening. AMFI collects it from every fund house and publishes the whole file.
This is why the NAV you buy at is not the one you saw when you pressed the button. Whether you get today's or tomorrow's depends on when your money actually reached the fund, and every fund's scheme document sets that cut-off out.
The mistake that costs money
Two funds: one at ₹12, one at ₹600. The ₹12 one looks cheap.
It is not cheaper. It is not anything.
NAV is assets divided by units, and the number of units is an accident of history — how long the fund has existed and how many were issued. A fund launched in 1995 at ₹10 that grew sixty-fold is at ₹600. A fund launched last year is near ₹10. Nothing about either tells you what happens next.
₹10,000 buys 833 units of the ₹12 fund or 16.7 units of the ₹600 one. If both rise 10%, both holdings are worth ₹11,000. The unit count is bookkeeping.
Funds sometimes launch new schemes at ₹10 precisely because ₹10 feels cheap. It is worth knowing that is a marketing decision, not a valuation.
What NAV is good for
- Your own value: units × NAV = what your holding is worth.
- Return over time: the change in one fund's own NAV, across a period, is its return. That is what every return figure on this site is computed from.
What it is not good for is comparing two funds at a point in time. For that you need returns, which are changes in NAV — never the level.
One thing that trips up the returns
A NAV-based return is correct only when nothing has been paid out of the fund. On an IDCW plan money is paid out and the NAV drops by that amount, so a NAV-only return understates it badly. We wrote about that here.
It is why returns on this site are computed on the Growth option, and why the fund page says which NAV date each figure came from.
Analysis, not advice. NAVs shown here come from AMFI's published file, dated on each page.