How do you calculate the NAV of a mutual fund?

You make investments with your hard-earned money. With each investment, you aim to increase the total value of the assets at your disposal. The net asset value (NAV) of a mutual fund helps you keep track of your investments from one market cycle to another. It explains the total value of your mutual funds and determines your portfolio’s return in the long run. 

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It’s important at the end of each business day to calculate NAV. Mutual fund houses or accounting firms hired by them calculate this value.

NAV and mutual funds

Simply put, NAV is the value per unit of the mutual fund minus all expenses and liabilities. It is the value of each unit of the fund in the market. NAV reflects the per-unit value generated by a mutual fund for its investors.

Depending on your financial goals and risk-return profile, you can invest in a variety of mutual funds. One of the most important factors to consider at this stage is the NAV of a fund.

Market price and NAV of mutual funds

It is important to note that NAV is not the market price of mutual funds. It is the per-unit worth of your mutual fund after subtracting all expenses and liabilities. On the other hand, the market price is the amount you have to pay to acquire mutual fund units from the market. The price of mutual fund units is affected by many factors like the demand-supply mechanism in the market, the company’s performance, and so on. So, the NAV of your mutual fund will always be different from its market price.

What NAV can tell you

You must have heard that mutual funds that perform well in the market usually have higher NAVs. However, this is not a correct assumption to base your investments on.

NAV only determines the number of units you will be assigned. It can certainly help you to understand how your fund is performing on a day-to-day basis. It also indicates how the underlying assets of your fund are performing.

What NAV can’t tell you

Sometimes significant capital gains exposure is built up within an index fund or even an older mutual fund. NAV cannot account for this. In fact, NAV cannot tell whether the intrinsic value of the underlying assets is reasonable or not.

Calculating the NAV

The NAV of mutual funds in India is calculated on a daily basis. The steps given below will provide a basic idea of this calculation:

  1. Ascertain the market value of your fund
  2. Deduct any expenses or liabilities from your total fund value
  3. Determine the number of units of your fund issued
  4. Divide the net market value by the number of outstanding units to get NAV

Say, the total market value of your fund is Rs 10 lakh. The mutual fund issue is 20,000 units at Rs 10 each. There are liabilities and expenses worth Rs 50,000. In this case, the total market value of your fund is Rs 9.5 lakh (Rs 10 lakh – Rs 50,000). So,  your fund’s NAV is Rs 9.5 lakh/20,000 = Rs 47.5


NAV can help you to track the daily performance of a mutual fund. If you need more help with mutual fund investments, you could access in-depth mutual fund research with a broker like Kotak Securities. Simply open an account to give an instant boost to your investment plans.