Learn · SIPs and compounding
NAV: the price of one unit
What NAV means, when it's set, and why a low NAV isn't cheap.
2 min read
Net asset value
NAV is the value of everything a fund holds, minus its costs, divided by the number of units. It's the price at which you buy or sell a unit that day.
Set once a day
Funds publish NAV after markets close each business day. Which day's NAV you get depends on when your money reaches the fund house: before 3 pm for most funds, before 1:30 pm for liquid and overnight funds.
Example
Buying with ₹1,000
If the NAV is ₹50, ₹1,000 buys 20 units. If the NAV later rises to ₹55, your 20 units are worth ₹1,100.
Guess first
You put ₹1,000 in a fund with NAV ₹12, or ₹1,000 in one with NAV ₹120. Both rise 10%. Which made you more?
See the answer
The same. The same: ₹100 either way. You get more units of the ₹12 fund, but each is worth less. A low NAV isn't cheap; it often just means the fund is newer.
What to compare instead
Look at how the fund did over several years against its category, how far it fell in bad times, and its yearly fee.
Words from this lesson
- Cut-off time: The time your money must reach the fund house to get that day's NAV.
- Units: Your share of a mutual fund.
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