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What Is Net Asset Value (NAV) Of A Mutual Fund? How It Is Calculated?


A NAV can be assigned to any qualified corporate organization or financial product that interacts with the accounting concepts of assets and liabilities. The difference between assets and liabilities in the context of corporations and commercial entities is known as the net assets, net worth, or capital of the company. The fund's NAV indicates a "per-share" value of the fund, making it easier to evaluate and transact in fund shares.


The net asset value (NAV) of an entity indicates its net worth. It is easy to calculate this by dividing the fund's total net assets by the total number of units issued to investors. It is most usually used to refer to a mutual fund or an ETF (exchange-traded fund). The NAV is the fund's per-share/unit price on a given date or time. NAV is a mutual fund's per-unit market value.

Mutual Fund

Mutual Fund

Mutual funds pool investor funds and reinvest them in the stock market on their behalf. The NAV of a mutual fund scheme is the market value of all assets held by the fund. If you invest in a mutual fund, the fund will issue your units based on how much you put in.

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

NAV Formula

NAV Formula

The formula for calculating the NAV of a mutual fund is simple:

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

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

Net asset value is a term that is frequently used to find prospective investment possibilities inside mutual funds, ETFs, or indexes. NAV can also be used to assess the holdings in one's portfolio. An investment account is required to invest in any of the aforementioned assets.

Difference between Stock Price and NAV

Difference between Stock Price and NAV

The NAV pricing mechanism used for trading mutual fund shares differs greatly from that used for trading common stocks or equities, which are issued by firms and traded on a stock market.

Stock Price

Through an IPO and maybe later extended offers, a firm issues a limited number of equity shares, which are subsequently traded on exchanges. Stock prices are determined by market forces or supply and demand for the shares. The value or pricing structure for stocks is purely determined by market demand.


The value of a mutual fund is defined by how much money is invested in it, as well as the costs of running it and the number of outstanding shares. The NAV, on the other hand, does not give a performance statistic for the fund. Because mutual funds transfer nearly all of their income and realized capital gains to fund owners, the NAV of a mutual fund is largely irrelevant in determining a fund's success.

Story first published: Monday, December 20, 2021, 12:11 [IST]
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