What is the net asset value (NAV) of a mutual fund? How is it calculated?



Mutual fund

Mutual funds pool funds from investors and reinvest them in their name on the stock exchange. The net asset value of a mutual fund is the market value of all the assets held by the fund. If you invest in a mutual fund, the fund will issue your units based on the amount you invested.

Certain terminologies have unique meanings when it comes to investing. Net asset value is one such phrase for mutual fund investors. This abbreviation appears whenever you try to buy or sell mutual fund units.

Net asset value formula

Net asset value formula

The formula for calculating the net asset value of a mutual fund is simple:

NAV = (Assets – Liabilities) / Total number of shares outstanding

For the assets and liabilities of a fund, the appropriate qualifying elements should be listed.

Net asset value is a term frequently used to find potential investment opportunities within mutual funds, ETFs or indices. Net asset value can also be used to value portfolio holdings. An investment account is required to invest in any of the above assets.

Difference between share price and net asset value

Difference between share price and net asset value

The net asset value valuation mechanism used for trading in mutual fund stocks differs greatly from that used for trading common stocks or stocks, which are issued by companies and traded on a stock market. .

Share price

Through an IPO and possibly subsequent extended offerings, a company issues a limited number of shares, which are then traded on the stock exchange. Stock prices are determined by market forces or the supply and demand of stocks. The value or price structure of stocks is determined purely by market demand.


The value of a mutual fund is defined by the amount of money invested in it, along with the running costs and the number of shares outstanding. The NAV, on the other hand, does not provide a performance statistic for the fund. Since mutual funds transfer substantially all of their income and realized capital gains to fund owners, the net asset value of a mutual fund is largely irrelevant in determining the success of a mutual fund. ‘a fund.



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