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All About NAV - Mutual Fund Net Asset Value

Find out how you can calculate mutual fund NAV and why it matters. Bonus: we’ve debunked two popular myths regarding NAV. Come check it out!
April 7, 2022

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Net Asset Value or Net Asset Worth is the valuation of a company’s assets minus its liabilities. The net asset value of a mutual fund represents the worth of a fund by calculating its market value per share. 

It is indicative of a fund’s popularity and its book value. In this blog, we will look at what is NAV, how it is calculated, and why it is important for investors.

What Is NAV?

In simple terms, NAV or the Net Asset Value of a company or mutual funds is the value of its total assets minus its total liabilities. It is represented as the per-share price of a fund. Think of mutual fund NAV as the equivalent of stock price.

Every AMC must disclose the NAV of its mutual funds regularly. In fact, this rule is applicable for mutual funds in India and countries like the USA as well.

For many, NAV isn't a big deal because mutual funds allow you to buy fractional units. But to a savvy investor who's looking to capitalize on falling markets, keeping up with mutual fund NAVs could be crucial.

The reason is simple. If the market falls, it's safe to assume that mutual fund NAVs will also fall. This means that investors can get more units of the fund if they choose to invest. Let's look at how this interesting mutual fund NAV is calculated.

What Is The Net Asset Value Formula?

The formula for calculating Net Asset Value is:

[Assets – (Liabilities + Expenses)] / Number of units outstanding 

To understand the above formula, let’s look at what each of the above terms includes and implies.


Assets of an entity include cash funds, all securities it has invested in, such as stocks, bonds, commercial papers, etc. and any dividend or interest earned on them.


Liabilities refer to all kinds of payments that an entity is liable for, including interests payable.


This includes all costs incurred in managing the fund, such as the salaries, rent, electricity, travel and meal expenses, advertising, marketing, legal costs, etc.


The number of mutual fund units issued to investors.

Is mutual fund jargon too confusing? Don’t worry, we’ve simplified it! Read this blog to understand what popular mutual fund jargon means

What Is The Net Asset Value Of A Mutual Fund?

Mutual funds use the pool of money collected from investors to invest in different securities of varying market value. Mutual fund NAV is determined using the market value of the total assets held and the total liabilities. 

The net value calculated is then divided by the total number of units issued by the mutual fund. Since the market value of the securities changes every day, mutual fund NAV also fluctuates on a daily basis. 

However, depending on the type of scheme—open-ended or closed-ended—fund houses are required to disclose the NAV on a daily and weekly basis respectively.

Read this blog to know more about the best mutual funds you can invest in 

How Is The Net Asset Value Relevant For Investors?

For investors, mutual fund NAV is an indicator of the value of the mutual fund as of any given point of time. It gives investors a picture of how well the fund is managing its assets versus its liabilities. 

Moreover, looking at historical NAV figures may help investors understand how well the fund has performed in the past. But it doesn’t paint the whole picture.

A lower mutual fund NAV does not mean that a particular fund is cheap. In fact, it means that an investor will receive more units by investing in the scheme. A higher mutual fund NAV, on the other hand, means that the investor will get lesser units on investing.

Mutual fund NAV is nothing but the book value of the fund and does not necessarily mean that a fund with a higher NAV is a better choice for a portfolio. 

Read this blog to know what makes Cube Wealth the best online investment platform

How Is The Net Value Of An Asset Calculated?

NAV is calculated in two ways: 

1. Daily Evaluation

Every day, after the stock market closes, mutual fund companies need to declare their closing prices and calculate NAV for the day. 

2. Cumulative Evaluation

A cumulative net evaluation of assets gives the price of its equity share. It is based on the cumulative cost of individual shares and represents the market value of an asset. 

Such evaluation of assets is affected by market changes and is subject to fluctuations.

Debunking The Misconceptions About NAV

Now that we have a fair idea about what NAV is and how it is calculated, it is also important to be aware of a few misconceptions around NAV. 

Misconception #1: Funds With A Lower NAV Are Cheaper Investments 

They are not. In fact, funds with similar portfolios but different NAVs could fetch you the same amount of gains.

Misconception #2: Funds With Higher NAVs Are Better Investments 

Mutual fund NAV has nothing to do with the performance. However, researching a fund's NAV of the past few years helps you gauge the fund’s credibility and stability.

Using a reliable investment app like Cube Wealth is the right way to invest in the best mutual funds without giving in to misconceptions or noise.


Mutual fund NAV represents the cost of buying and selling units in a mutual fund. However, mutual fund NAV is not enough of a parameter to help you understand if a mutual fund is right for your investment goals.  

Experts like Wealth First, Cube’s mutual fund advisory partner, conduct complex research on 12+ parameters to determine whether a fund can be deemed suitable for the short or long term for Cube users. 

Watch this video to know why you should invest with a proven advisor on your team


Team Cube

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