How to read a mutual fund NAV

The net asset value is the one number every mutual fund page shows and most people misread at least once. It is the price of one unit of the scheme on one day — nothing more. Here is what goes into it and what you can and cannot conclude from it.

What it is

A scheme holds investments — shares, bonds, cash — on behalf of its unit holders. At the end of each business day the fund values those holdings at the day’s closing prices, subtracts what the scheme owes (fees accrued, expenses payable) and divides by the number of units outstanding. The result is the NAV per unit, declared to two or four decimal places (SEBI investor education).

Fund houses must declare the NAV of every scheme on every business day, on their own websites and to the Association of Mutual Funds in India, which publishes them all in one file; its NAV history goes back years. That file is the only source of the mutual-fund figures on this site, and every NAV here carries the date it belongs to — “NAV of {date}” — because a NAV is a valuation on a day, not a running price.

Why a high NAV is not an expensive fund

Two schemes with the same portfolio and the same costs will have different NAVs if they started on different days, because each began at ₹10 and has grown by its own history since. A ₹10,000 purchase buys 1,000 units at a NAV of ₹10 or 100 units at ₹100 — and both holdings are worth ₹10,000, and both rise and fall by the same percentage when the portfolio does. Nothing about a NAV of ₹500 is “expensive” and nothing about ₹12 is “cheap”. What matters is the change in NAV over time, in percent, and what the scheme holds.

What is already inside the NAV

The scheme’s running costs — the fund house’s fee, registrar, custodian and distribution expenses, together the expense ratio — are accrued into the NAV every day. The NAV you see is after costs. That is why the direct plan and the regular plan of the same scheme have different NAVs though they hold the same portfolio: the regular plan carries a distributor’s commission inside its expense ratio, so its NAV grows a little slower (direct vs regular plans).

Growth and IDCW

A scheme usually offers two options. In the Growth option everything the portfolio earns stays in the scheme, so the NAV carries the whole history of the investment. In the IDCW option — income distribution cum capital withdrawal — the scheme pays out from time to time, and on each record date the NAV drops by the amount paid. An IDCW NAV therefore understates the scheme’s return; the payout is part of it. For that reason the returns and the charts on this site use Growth NAVs only, and IDCW rows show the NAV and the identifiers without a return.

Which NAV you get when you buy or sell

A purchase or redemption is not priced at the NAV you see on screen. It is priced at the applicable NAV, which depends on the day the fund house receives your request and, for purchases, the day your money reaches the scheme, against cut-off times that SEBI sets for each category of scheme. A request after the cut-off takes the next business day’s NAV. Any platform or fund house statement shows the applicable date beside the NAV.

Turning NAVs into a return

The return between two dates is the change in Growth NAV. For periods under a year it is quoted as a simple percentage; for a year or more as a compound annual growth rate: the ratio of the two NAVs raised to one over the number of years, less one. The methodology page shows the formula the tables on this site use and the dates they use it between. A return measured this way is a description of the past, which is why every mutual-fund page here says so — it is not an indication of what the next year will do.

What a NAV cannot tell you

A NAV says nothing about what the scheme holds, how concentrated it is, how much it swings or what it costs. Those are in the scheme information document and the monthly portfolio disclosure, both on the fund house’s website. The NAV is the end of that chain: one day’s valuation, after costs, per unit.