NAV Full Form, Meaning and How to Calculate It 

Key Takeaways 

• NAV stands for Net Asset Value and represents the per-unit value of a mutual fund scheme, not whether the fund is cheap or expensive. 

• NAV is calculated by subtracting total liabilities from total assets and dividing the result by outstanding units. 

• Mutual fund NAV is generally calculated and declared once each business day after the markets close, based on the applicable valuation of the underlying investments. 

• A lower NAV does not mean a mutual fund is a better bargain. Fund selection should consider factors such as portfolio, risk, costs and investment strategy. 

• The NAV applicable to your transaction depends on cut-off rules and fund realisation, particularly for purchases. The applicable NAV also determines the value of units when you redeem your investment. 

NAV full form is Net Asset Value, the per-unit value of a mutual fund scheme. It tells you what each unit is worth, not whether a fund is cheap or expensive or whether it has performed well. If you are new to what mutual funds are, this guide is a good place to start. It explains the NAV meaning, formula, a worked calculation, when NAV is declared, and why a lower NAV does not automatically make a fund a bargain. 

What is NAV in a Mutual Fund? 

NAV, or Net Asset Value, is the per-unit value of a mutual fund scheme, calculated by dividing its total assets minus liabilities by the number of units outstanding. In simple terms, NAV in mutual fund investing represents the value or price of one unit of the scheme. It is the price used for buying and selling mutual fund units, subject to applicable cut-off rules. NAV changes as the market value of the scheme’s underlying investments changes. 

NAV Full Form and What Net Asset Value Means 

The NAV full form is Net Asset Value. “Net” means the value remaining after deducting liabilities. “Asset” refers to the investments and other assets held by the scheme. “Value” represents their resulting worth.  

Together, net asset value indicates the value attributable to each outstanding unit after accounting for liabilities. This is the basic meaning of NAV in mutual fund investing and helps investors understand the value assigned to each unit. 

NAV Formula 

NAV = (Total Assets – Total Liabilities) / Total Number of Units Outstanding 

The NAV formula uses three key inputs: 

• Total assets: The market value of securities and other assets held by the scheme. 

• Total liabilities: Amounts the scheme owes, including applicable expenses and other obligations. 

• Units outstanding: The total number of units currently held by investors. 

This net asset value calculation gives the value attributable to one unit of the mutual fund. 

How is NAV Calculated? A Worked Example 

Suppose a mutual fund scheme has investments and other assets worth ₹50 crore and liabilities of ₹2 crore. It has 4 crore units outstanding. The calculation would be: 

Particulars	Amount
Total assets	₹50 crore
Total liabilities	₹2 crore
Net assets	₹48 crore
Units outstanding	4 crore
NAV per unit	₹12

So, the net asset value is ₹12 per unit because ₹48 crore divided by 4 crore units equals ₹12. In practice, the fund’s NAV is calculated for each business day based on the applicable valuation methodology.  

When is NAV Declared? 

NAV is generally calculated and declared once each business day after the markets close, using the closing value of the scheme’s underlying securities. Unlike a listed share price, which can move throughout the trading session, a mutual fund does not have a continuously changing NAV during market hours. Mutual fund schemes publish NAVs daily on their respective websites, and AMFI also provides NAV information.  

Understanding how mutual fund redemption works is also important because the NAV applicable at the time of redemption determines the value of the units you sell. Any applicable exit load can reduce the amount you receive, so the final proceeds may differ from a simple calculation based only on the change in NAV. 

Cut-Off Time: Which Day’s NAV Do You Get? 

The applicable NAV depends on two things. When you submit the request, and for purchases, when the investment amount is received and available for utilisation by the mutual fund. For most schemes, the purchase cut-off is 3 p.m., subject to applicable rules. AMFI’s current guidance explains the realisation requirement.  

For the complete rules on which day’s NAV applies to your transaction, refer to the dedicated AMFI cut-off time guide. 

NAV and Your Returns 

Your gain or loss from a mutual fund depends on the change in NAV between when you buy and when you redeem units. This is after accounting for applicable costs such as an exit load. For example, if your purchase NAV is ₹20 and the redemption NAV is ₹25, the NAV movement represents a 25% increase before applicable charges and taxes. For planning investments, an SIP calculator can help estimate potential outcomes. 

Conclusion 

Understanding NAV is fundamental to understanding mutual fund transactions. NAV, or Net Asset Value, represents the value of one unit based on the scheme’s assets, liabilities, and outstanding units. It changes with the value of the underlying portfolio and is generally declared daily after markets close. A low NAV does not make a fund cheaper or automatically more attractive. Think of NAV as the price per unit and the timestamp on your transaction, not a scorecard. 

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FAQs 

What is the full form of NAV? 

The full form of NAV is Net Asset Value. It represents the value attributable to each mutual fund unit after accounting for the scheme’s assets and liabilities. NAV helps determine the value at which units are allotted or redeemed, subject to the applicable scheme and transaction rules. 

What is NAV in a mutual fund in simple words? 

NAV in mutual fund terms is simply the value of one unit of a scheme. It is calculated from the scheme’s net assets and number of outstanding units. When you invest, the applicable NAV determines how many units you receive for your investment amount. 

How is NAV calculated? 

NAV is calculated by subtracting a scheme’s total liabilities from its total assets and dividing the result by its outstanding units. The NAV formula is: NAV = (Total Assets – Total Liabilities) / Total Number of Units Outstanding. This gives the per-unit value of the scheme. 

Is a lower NAV better? 

No, a lower NAV is not automatically better. NAV only indicates the value of one unit and does not tell you whether a fund is undervalued or likely to perform well. Fund selection should instead consider factors such as investment strategy, portfolio, risk, costs and long-term performance. 

At what time is NAV declared? 

NAV is generally declared after the markets close on each business day because the scheme’s underlying securities need to be valued using applicable closing prices. Mutual funds publish their NAVs daily, and investors can access them through the AMC’s website and AMFI’s NAV database. 

Which day’s NAV will I get if I invest today? 

The NAV you receive depends on the applicable cut-off time and, for purchases, when the funds are actually received and available for utilisation by the mutual fund. For most schemes, funds available before the applicable 3 p.m. cut-off can qualify for that day’s closing NAV.