What is NAV?
When you buy a mutual fund, some units are allotted to you against your investment at a certain price. This price of units is called NAV or Net Asset Value. The NAV is updated on each trading day to reflect the latest position of the portfolio. This is a barometer to measure the health of your investments.
Calculation of NAV
Calculation of NAV is simple, it is arrived at after dividing the total assets of the mutual fund (current value of securities and cash and reduced by the liabilities, if any) by the number of units outstanding. Suppose the total assets of a mutual fund are Rs. 200 crores and the total allotted units are 2 crores, then the NAV of the fund is Rs. 100. Which means that on that date the purchase or redemption price of units shall be Rs. 100, plus entry or exit loads if any.
NAVs are used to track the performance of the mutual funds. Unlike the prices of stocks which keep changing every second, the NAV is calculated on the closing prices of the stocks. NAV is an important tool to see the returns on your mutual fund investments. If your purchase price was Rs. 10 and the current NAV of the same scheme is Rs. 15, it means that your investments have appreciated 50%.
You can keep a check on the NAVs to see the performance of your mutual fund. NAVs of all the schemes of all mutual funds operating in India are available at the website of The Association of Mutual Funds in India (AMFI) at amfiindia.com Check out the latest NAV of any mutual fund here
Effect of dividend payout on NAV
While analyzing a mutual fund scheme on the basis of its NAV performance, you must also check, whether the scheme is a dividend paying scheme or a growth scheme. In case of a dividend paying scheme, the NAV shall not reflect the actual returns of the scheme, because, each time when the dividend would have been declared, the NAV would have come down to off set its effect. If you compare the same scheme with dividend payout and growth option you would discover that the NAV of the growth option of the same scheme is much higher than that of the dividend option scheme.
When you buy a mutual fund, some units are allotted to you against your investment at a certain price. This price of units is called NAV or Net Asset Value. The NAV is updated on each trading day to reflect the latest position of the portfolio. This is a barometer to measure the health of your investments.
Calculation of NAV
Calculation of NAV is simple, it is arrived at after dividing the total assets of the mutual fund (current value of securities and cash and reduced by the liabilities, if any) by the number of units outstanding. Suppose the total assets of a mutual fund are Rs. 200 crores and the total allotted units are 2 crores, then the NAV of the fund is Rs. 100. Which means that on that date the purchase or redemption price of units shall be Rs. 100, plus entry or exit loads if any.
NAVs are used to track the performance of the mutual funds. Unlike the prices of stocks which keep changing every second, the NAV is calculated on the closing prices of the stocks. NAV is an important tool to see the returns on your mutual fund investments. If your purchase price was Rs. 10 and the current NAV of the same scheme is Rs. 15, it means that your investments have appreciated 50%.
You can keep a check on the NAVs to see the performance of your mutual fund. NAVs of all the schemes of all mutual funds operating in India are available at the website of The Association of Mutual Funds in India (AMFI) at amfiindia.com Check out the latest NAV of any mutual fund here
Effect of dividend payout on NAV
While analyzing a mutual fund scheme on the basis of its NAV performance, you must also check, whether the scheme is a dividend paying scheme or a growth scheme. In case of a dividend paying scheme, the NAV shall not reflect the actual returns of the scheme, because, each time when the dividend would have been declared, the NAV would have come down to off set its effect. If you compare the same scheme with dividend payout and growth option you would discover that the NAV of the growth option of the same scheme is much higher than that of the dividend option scheme.
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