NAV full form and meaning in mutual funds

The formula

NAV = (Market value of the fund's assets − liabilities) ÷ number of units outstanding

How and when NAV is set

The AMC values the portfolio at market prices after the markets close and declares one NAV per scheme for each business day, which is published on the AMC and AMFI websites. Your order gets the NAV of a particular day according to cut-off times:

For purchases, the money must also be received (realised) by the fund by the cut-off for that day's NAV to apply. An order after the cut-off gets the next business day's NAV.

The big myth: a low NAV is cheap

NAV is not a share price signal. Suppose you invest ₹10,000 in Fund A with NAV ₹20 and Fund B with NAV ₹200. You get 500 units of A and 50 units of B. If both funds rise 20% the next year, A's NAV is ₹24 and B's is ₹240, and your ₹10,000 becomes ₹12,000 in both. A new fund offered at ₹10 is not cheaper than an old fund at ₹100; it simply has not grown yet. What matters is the percentage return, the portfolio and the cost, not the number.

What moves NAV

• Changes in the prices of the securities the fund holds.
• Daily expenses, which are built into the NAV (see expense ratio).
• Payouts of IDCW (dividend) which reduce NAV by the amount paid.

Because expenses are deducted inside NAV, you never receive a separate bill for fund charges.

How to read NAV for decisions

• To see growth, compare NAVs across dates for the same scheme and plan (growth vs IDCW, direct vs regular, are different NAVs).
• Use the scheme insights tool for real NAV history.
• Never compare NAVs of different funds as if one were more expensive.

A cut-off example

You place a ₹10,000 purchase in an equity fund at 2:40 pm on a Friday and the money reaches the fund by 2:55 pm. You get Friday's NAV. If the money reaches the fund at 3:05 pm, or you place the order after 3 pm, you get the NAV of the next business day, Monday (if Monday is not a holiday). For a liquid fund the purchase cut-off is 1:30 pm, so the same order at 2:40 pm would get the next business day's NAV. Cut-off times are why two investors who "invested on Friday" can have bought at different prices.

NAV in special cases

• IDCW (dividend) option. When a fund pays IDCW the NAV falls by the amount paid. The payout is not extra profit: it comes out of your own units' value.
• Growth option. Nothing is paid out; the NAV keeps growing.
• Direct vs regular. The same scheme has different NAVs for the direct and regular plans because their expenses differ. Always compare like with like.
• ETFs. An ETF has a NAV too, but it also trades on the exchange at a market price that can sit slightly above or below the NAV.
• NFO. A new scheme's first NAV is usually ₹10, set by the fund house. See NFO.

How to find and use NAV history

Fund houses and AMFI publish each scheme's NAV daily, and the history is available on AMFI's website and on investing apps. For decisions, look at returns between two NAVs over a period that matches your goal, not at the latest figure on its own. The scheme insights tool shows real NAV history and trailing returns for a scheme.