Photo: iStock
Photo: iStock

Explained: How NAV of a mutual fund is calculated

The total assets of a mutual fund is the sum of the current market value of all the securities held in the portfolio, cash and accrued income

The net asset value or NAV is the current value of a mutual fund unit. All transactions of the investor are conducted at prices linked to the NAV of the scheme. 

The total assets of a mutual fund is the sum of the current market value of all the securities held in the portfolio, cash and accrued income. From this, current liabilities and expenses incurred in building and managing the portfolio and servicing the investors, up to the limits permitted by Sebi, are deducted to arrive at the net assets. The net assets are divided by the total number of units of the scheme on a particular day to arrive at the NAV. The NAV is calculated for every business day. It may go up or down, depending upon the changes in the value of the securities held.

Close