NAV — Net Asset Value — is the price of one unit of a mutual fund. If a fund's total investments are worth ₹500 crore and it has 50 crore units outstanding, each unit is worth ₹10. When you invest ₹5,000 in that fund, you are simply buying 500 units at ₹10 each.
How NAV is calculated
Every business day, after the market closes, the fund adds up the current value of everything it holds — every share, bond and cash balance — subtracts what it owes (fees, pending bills), and divides by the number of units all investors hold. The result is that day's NAV. It is published each evening, usually by 11 pm.
Because it is calculated after closing prices, a NAV has a date attached: 23 September's NAV is not 22 September's NAV. This matters when you buy — an order placed before the 3 pm cut-off gets that day's NAV; a later order gets the next day's.
The ₹10 trap: why low NAV does not mean cheap
Investors often think a fund with a NAV of ₹12 is “cheaper” than one with a NAV of ₹340 — so more room to grow. It isn't. What matters is the percentage growth of the underlying holdings, and your money buys units in proportion.
Invest ₹10,000 at a NAV of ₹10 and you hold 1,000 units. Invest the same ₹10,000 at a NAV of ₹500 and you hold 20 units. If both funds' holdings rise 15% this year, both investments are worth ₹11,500. The number of units is just bookkeeping.
When NAV actually matters
NAV is the machinery behind every rupee you put in or take out: your purchase converts to units at that day's NAV, and redemptions pay you units × NAV of that day. It is also the number you see rising over years in your statement — the quiet proof of compounding.
For SIP investors, NAV moves work in your favour: the same ₹5,000 buys more units when NAV dips and fewer when it peaks — the rupee-cost averaging you already know from What is a SIP?.
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Message IFI on WhatsApp →Quick recap
- NAV is the per-unit price of a fund, computed once daily after market close.
- Low NAV ≠ cheap fund — returns depend on percentage growth, not unit price.
- Cut-off times decide which day's NAV your order gets.
- For SIPs, NAV dips mean more units per instalment — that is the point.
Frequently asked questions
What is NAV in simple words?
NAV is the price of one unit of a mutual fund on a given day — the fund's total current value divided by the number of units all investors hold. It is published once every business day, after market close.
Is a lower NAV better?
No. A ₹10,000 investment grows the same whether it buys 1,000 units at ₹10 or 20 units at ₹500. Returns come from the percentage growth of the fund's holdings, not from the unit price.
When is a mutual fund's NAV calculated?
Once per business day, using that day's closing prices. Orders placed before the 3 pm cut-off are executed at the same day's NAV; later orders get the next business day's NAV.
Why did my fund's NAV fall today?
NAV moves with the market value of the fund's holdings. A fall simply means the portfolio closed lower that day — common and expected for equity funds, and exactly when SIP instalments buy units cheaper.