NAV

NAV (Net Asset Value) is the per-unit price of a mutual-fund scheme on a given business day. It is the single most important reference figure for investors: units are purchased and redeemed at NAV (adjusted for any applicable exit load).

How NAV is calculated:
NAV = (Total Market Value of All Securities Held + Cash and Receivables – Liabilities and Accrued Expenses) ÷ Total Number of Outstanding Units

Each component is updated daily: the AMC marks its equity holdings to the closing NSE/BSE price, debt instruments to the weighted average traded yield or a valuation matrix published by AMFI's approved agencies (CRISIL, ICRA), and cash positions to their face values. The resulting NAV is published by each AMC on AMFI's website (amfiindia.com) by 11 PM IST every business day. (Source: SEBI (Mutual Funds) Regulations, 1996; SEBI Master Circular, June 2024; amfiindia.com — Daily NAV publication schedule.)

What NAV tells you — and what it doesn't:

• NAV reflects the current per-unit value of the scheme's portfolio — nothing more.
• A high NAV does not mean a fund is expensive; a low NAV does not make it "cheaper." Two funds with identical underlying portfolios but different inception dates will have materially different NAVs.
• NAV movement over time is what reflects investment performance: percentage change in NAV over a holding period = the scheme's absolute return for that period (before tax and exit load).
• Comparing raw NAV figures across schemes is not a meaningful performance measure; compare percentage returns over the same time window against the scheme's benchmark. (Source: SEBI Investor Education material; sebi.gov.in; AMFI investor education — amfiindia.com.)

Applicable NAV for different transaction types:

• Lump-sum purchase ≤₹2 lakh: NAV of the business day on which the application and cleared funds are received before cut-off time (3 PM for equity/hybrid; 1 PM for liquid funds).
• Lump-sum purchase >₹2 lakh: NAV of the day on which cleared funds are received, regardless of application time — this was mandated by SEBI Circular dated 17 September 2020 to prevent NAV arbitrage.
• SIP instalment: NAV of the SIP debit date, subject to NACH/UPI processing success.
• Redemption: NAV of the business day on which a valid redemption request is received before cut-off time (3 PM).

(Source: SEBI Circular SEBI/HO/IMD/DF3/CIR/P/2020/197, dated September 17, 2020; sebi.gov.in.)

Direct Plan vs Regular Plan NAV divergence:
Every scheme has a Direct Plan NAV and a Regular Plan NAV for the same portfolio. Because TER is deducted daily and Direct Plans carry lower TER (no distributor commission), the Direct Plan NAV grows faster than the Regular Plan NAV over time, even though the underlying portfolio is identical. Over 15–20 years, the TER differential of 0.5–1% per annum can produce a NAV divergence of 15–25% between the two plans. (Source: SEBI Master Circular, June 2024, Section on TER; AMFI data on Direct vs Regular NAV series; amfiindia.com.)

NAV and exit load interaction:
The amount an investor receives on redemption = (Units × NAV) – Exit Load. Exit load (if applicable) is calculated as a percentage of redemption proceeds, deducted from the payout, and credited back to the scheme's NAV — not to the AMC. (Source: SEBI Master Circular, June 2024.)

Related terms: AUM, TER, Exit Load, Direct vs Regular Plan.

Disclosure: MintByte is an AMFI-registered mutual fund distributor (ARN-314872) and an APMI-registered Authorised Person of Motilal Oswal Financial Services (APRN-01658). Content is educational.