What is NAV in simple words?

NAV, or Net Asset Value, is the per-unit price of a mutual fund on a given day. If a fund's NAV is ₹100 and you invest ₹5,000, you get 50 units. It is calculated once every business day, after markets close.

How is NAV calculated?

NAV = (total value of everything the fund holds − liabilities) ÷ total units outstanding. The fund house calculates it end-of-day using closing prices of every stock and bond the fund owns.

Is a lower NAV a cheaper mutual fund?

No. NAV is not like a stock price. A fund with NAV ₹10 and a fund with NAV ₹1000 can grow at the same rate. What matters is how much the NAV grows in percentage terms, not the absolute number.

Why is NAV calculated only once a day?

SEBI rules require mutual funds to strike a single daily NAV using end-of-day market prices, so every investor buying or selling that day gets the same fair price. This is different from stocks or ETFs, which trade all day at fluctuating prices.

What time is the NAV cut-off for buying a mutual fund?

For most equity mutual funds in India, the cut-off is 3 PM on business days. Orders placed before 3 PM get that day's NAV; orders after 3 PM get the next business day's NAV. Liquid funds have earlier cut-offs (typically 1:30 PM).

What is NAV in a mutual fund? A clear guide with examples

TL;DR

NAV = Net Asset Value. It is the per-unit price of a mutual fund. It is calculated once every business day after markets close, using the end-of-day value of everything the fund holds.

Key point: a lower NAV does not mean the fund is cheaper. NAV is a starting point, not a valuation. What matters is how much the NAV grows in percentage terms.

The formula

Example. A fund holds stocks worth ₹1,000 crore, has ₹5 crore of pending expenses (liabilities), and has 100 crore units outstanding.

Assets − Liabilities = ₹995 crore
₹995 crore ÷ 100 crore units = ₹99.50 per unit

That is today's NAV.

How buying and selling works using NAV

You never see a bid-ask spread or a price ticker for mutual funds. Instead, everything happens at NAV.

Buying. You want to invest ₹10,000. NAV is ₹250. You get 10,000 ÷ 250 = 40 units.
Selling. You hold 40 units and want to redeem. NAV is now ₹300. You get 40 × 300 = ₹12,000. Your gain is ₹2,000 or 20%.

The fund creates units when you buy and cancels them when you sell. This is why the NAV method is called the open-ended structure — the pool grows or shrinks with demand.

The single most misunderstood thing about NAV

Two funds with different NAVs can be identical in every other way.

Consider:

Fund A launched in 2020, NAV today: ₹25
Fund B launched in 2005, NAV today: ₹250

Fund B has been around longer, so its NAV has had more time to compound. That does not mean Fund B is expensive or that Fund A is a "bargain". If both hold the same stocks and grow at the same rate, they'll continue to grow at the same rate.

What you should care about is the growth rate, not the starting number.

For example, on our , you can see the current NAV (~₹216 as of the last statement date) alongside its 3-year and 5-year CAGR. The NAV number by itself tells you nothing — but the CAGR does. Read for more.

Why NAV is calculated only once a day

Mutual funds are structurally different from stocks or ETFs:

Stocks trade continuously on exchanges. Prices update every second based on live bids and asks.
Mutual funds do not trade on exchanges. When you buy, the fund house creates new units for you. When you sell, they cancel your units and pay you from the pool.

Because unit creation and cancellation happens directly with the fund, SEBI mandates one fair price a day — called the daily NAV. Everyone who transacts before the cut-off gets the same price. This prevents intra-day speculation and ensures fair pricing.

For equity funds, the cut-off is 3 PM on business days. Orders placed before 3 PM get today's NAV (published later that evening). Orders after 3 PM get tomorrow's NAV.

Liquid funds have earlier cut-offs (typically 1:30 PM) because they need to invest incoming money by end of day to earn overnight interest.

Where does NAV data come from?

Fund houses publish daily NAV data to (Association of Mutual Funds in India) after markets close. AMFI aggregates and publishes an official NAV file every night. Data platforms like — the source powering MF Gyan — mirror this data and make it accessible.

You can see the daily NAV history for every Indian mutual fund on the .

Does NAV change when the fund declares a dividend?

Yes. When a fund declares an IDCW (Income Distribution cum Capital Withdrawal — the newer name for what used to be called a "dividend"), the NAV drops by the payout amount on the ex-date. So if a fund's NAV was ₹100 and it pays ₹5 per unit as IDCW, the NAV becomes ₹95.

This is why the Growth option and the IDCW option of the same underlying scheme show different NAVs over time. The Growth option compounds; the IDCW option distributes.

What NAV does NOT tell you

Nothing about future returns. A high NAV does not mean the fund will slow down. A low NAV does not mean it has more room to grow.
Nothing about the fund's quality. A ₹500 NAV fund is not "better" than a ₹50 NAV fund. Look at the underlying holdings, category, and historical CAGR.
Nothing about risk. Two funds can have similar NAVs but wildly different volatility. Check for that.

Summary

NAV is the per-unit price of a mutual fund
Calculated once a day using end-of-day holdings values
You buy and sell at NAV — no bid-ask
The NAV number is meaningless in isolation — always look at growth rate (CAGR)
Cut-off is 3 PM for equity funds; earlier for liquid funds