13 Things You Need To Know About Mutual Fund NAV

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  • 20 Dec 2023
13 Things You Need To Know About Mutual Fund NAV

Key Highlights

  • NAV stands for Net Asset Value in a mutual fund, and it represents the price per unit of the mutual fund.
  • Every working day, NAV is updated. NAV mutual fund update time is 9 p.m.
  • As the price of the underlying securities in the fund portfolio changes daily, the mutual fund NAV fluctuates.

You should know these 13 things about mutual fund NAV:

1. Understanding NAV in Mutual Funds
In a mutual fund, NAV refers to the price of 1 unit. Money is collected from retail investors (you) and invested in various investment vehicles. However, despite having money with them, mutual funds might not always invest it all.

A mutual fund is divided into units. Investors receive mutual fund units when they invest in mutual funds. The NAV represents all the assets held by a mutual fund. Additionally, since they invest in stocks, the value of these stocks changes over time.

2. Looking Solely at the NAV is not Advisable
Considering NAV mutual funds is generally not necessary. In India, there is a common misconception that a lower NAV is better, especially with newer mutual funds having lower NAVs than older ones. This misconception has led to instances where investors sell their old mutual fund units to invest in newer ones based on NAV alone.

However, when considering mutual fund investments, looking solely at the NAV is not advisable. Instead, it's important to consider various factors such as past performance, the size of Assets Under Management (AUM), alpha, beta, and other relevant details.

3. Understanding Why the NAV Might Not Be the Most Important Thing for Investors
Firstly, not all mutual funds are the same. Before investing, look at different things about the fund, not just the NAV.

Assume two mutual funds, Fund A (MF-A) and Fund B (MF-B). Except for one thing: the NAV, Everything else about them is the same: manager, investment style, launch date.

MF-A has a NAV of Rs. 20, and MF-B has a NAV of Rs. 50. Both have 20% of their money invested in a company called XYZ. If XYZ's shares go up by 10%, both MF-A and MF-B's NAV will go up by 2%. So, MF-A's NAV becomes Rs.20.4, and MF-B's NAV becomes Rs.51.

It may seem like MF-B grew more. However, if you put Rs. 100 in MF-A at the start, you'd get 5 units (Rs.20 each). After the increase, if you sold them, you'd have Rs.102. That's a profit of Rs.2.

Now, if you put Rs.100 in MF-B, you'd get only 2 units (Rs.50 each). After the increase, if you sold them, you'd also have Rs.102. The same profit as MF-A.

4. Where to Find a Mutual Fund NAV?
You can find that information on the respective page of that mutual fund on an online investment platform. For example, you want to know the NAV of the mutual fund ABC Bluechip Fund.

Step 1:
Visit the online investment platform. Step 2:
Log in to your investment account by filling in the necessary details. Step 3:
In the search bar at the top, type ‘ABC Bluechip Fund’ and press enter. Step 4:
Now, the ABC Bluechip Fund page opens. The mutual fund NAV can be found under the fund's name.

5. What is AUM in Mutual funds?
AUM should not be ignored when investing. In mutual funds, AUM stands for Asset Under Management, which is the total amount of assets managed by the fund. This includes all the assets that the mutual fund invests in, as well as its cash reserves.

6. What is the NAV of a Mutual Fund if Investors Buy it in the Evening?
The same day's NAV is used if the mutual fund is bought before 3 pm. You'll get units of a mutual fund at the NAV value at the end of that day if you order before 3 pm.

If you place the order after 3 pm, the NAV at the end of the next day will be the NAV value. When orders are placed on holidays, they're processed with the next working day's NAV.

7. What NAV Value is Taken into Account When Selling Mutual Fund Units in the Evening?
It works the same way when you buy units. If you sell units of a mutual fund before 3 pm on a working day, you will sell them at the NAV value of that day. If the order to sell is placed after 3 pm, then the NAV at the end of the next day will be used as the NAV value for the transaction.

When a selling order is placed on a holiday, the NAV value at the end of the next working day is considered.

8. NAV Mutual Fund Update Time
The NAV is updated at the end of every working day. SEBI requires mutual funds to update their NAV by 9 pm every day. Mutual fund NAVs aren't updated live due to difficulties tracking the values of the assets they hold constantly.

9. Are Investors Required to Consider the High NAV?
If other aspects of the mutual fund look good, then investing in it is a good idea, even if it has a high NAV. As explained before, the example showed that the NAV isn't that important if the mutual fund performs well.

Unlike stock prices, you don't need to worry about the NAV being too high. It can't be overvalued or undervalued like stock prices because the NAV is determined by the size of the Assets Under Management (AUM), not by market demand. So, if the mutual fund is performing well and fits your investment goals, a high NAV shouldn't be a big concern.

10. The Effect of the Sensex and Nifty on the NAV of Mutual Funds
Whether the Sensex or Nifty affects the Net Asset Value of a mutual fund depends on the type of mutual fund and the assets it holds.

Mutual funds invest in a variety of assets. The impact of Sensex or Nifty on a mutual fund's NAV is determined by the types and quantities of assets within that particular fund.

Sensex: It's a stock market index representing 30 large and stable companies listed on the Bombay Stock Exchange (BSE).

Nifty: Similar to Sensex, Nifty is an index representing 50 major companies listed on the National Stock Exchange (NSE), covering various industry sectors.

Effect on NAV: The influence of Sensex and Nifty on a mutual fund's NAV relies on how much the fund has invested in companies part of these indices. Large-cap mutual funds, which invest in the biggest companies, are significantly affected by changes in Sensex or Nifty.

For multi-cap mutual funds that invest in companies of various sizes, the impact depends on the proportion of large-cap assets in their portfolio.

It's crucial to note that changes in large-cap funds can also impact the performance of mid-cap and small-cap funds. Therefore, the NAV of small-cap and mid-cap mutual funds may also be influenced by fluctuations in Sensex and Nifty.

11. NAV and Stock Price
The NAV of a mutual fund and the stock price of a company have some similarities. However, there's a key difference.

The NAV is like the book value of a mutual fund, representing the exact value of its assets. On the other hand, a stock price is supposed to reflect the book value of a company, considering its assets and profits.

However, the stock price can change based on demand. If many people want to buy, the price goes up, and if many people sell, the price goes down. Overvalued and undervalued are terms used to describe these situations.

The NAV of mutual funds doesn't change based on demand. Thus, it can't be overvalued or undervalued. This is why, unlike stocks, investors don't typically use NAV as a factor when deciding to buy or sell mutual fund units.

12. What is the NAV of SIP?
The NAV of SIP is the same as the NAV of a mutual fund. Mutual funds can be invested through SIPs or lump sums.

SIP: SIP is a Systematic Investment Plan. You can invest a fixed amount of money every month in a mutual fund of your choice. Every month, the amount is automatically deducted from your account.

Lump Sum: You simply invest a large sum of money in a mutual fund at once.

The characteristics of mutual funds remain the same regardless of the method you choose. No matter whether you invest in a mutual fund via SIP or lump sum, the NAV remains the same.

13. Does a Mutual Fund's NAV Drop like Stocks do?
The NAV of a mutual fund can decrease, similar to how stock prices fluctuate. NAV goes up and down, even for well-performing mutual funds.


Beginners need to understand the above-mentioned points and the most common questions that arise when investing for the first time. Once you are clear on the above points, investing can be easily done with a well-informed decision. However, if you still need assistance while investing, you can consult an expert financial advisor.

FAQs on Mutual Fund NAV

There is no good NAV for a mutual fund. Depending on the fund's investment goals and individual investors' financial objectives, NAV has varying significance. Rather than focusing solely on its NAV, it's more important to assess the fund's performance, consistency, and alignment with your investment strategy.

As the price of the underlying securities in the fund portfolio changes daily, the mutual fund NAV fluctuates.

Yes. Every working day, NAV is updated. SEBI mandates that mutual fund NAVs be calculated and updated daily by 9 PM.

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