NAV — net asset value — is what one unit of a mutual fund scheme is worth on a given day. If a scheme’s NAV is ₹38.42, each unit is worth ₹38.42 that day, and your investment is worth the number of units you hold multiplied by that figure.
That sentence answers the question. The rest of this page covers the parts that genuinely trip people up: how the number is arrived at, which day’s NAV your money gets, why a ₹12 NAV is not cheaper than a ₹400 NAV, and what NAV has to do with a SIP.
How NAV is calculated
Take everything the scheme owns — its shares, bonds, cash and the income accrued on them. Subtract everything it owes, including accrued expenses and other liabilities. Divide what is left by the number of units outstanding.
NAV = (total assets − total liabilities) ÷ total units outstanding
Three things follow from that formula, and between them they explain most NAV questions.
NAV moves because the holdings move. The fund values its portfolio at the end of each business day. If the securities it holds are collectively worth more than they were yesterday, the NAV rises; if they are worth less, it falls. Nothing else is doing the work.
New money does not dilute the NAV. The unit count changes daily as investors buy and redeem, but a new investment adds cash to the numerator and units to the denominator at the same NAV. The two move together, which is why large inflows do not mechanically push a scheme’s NAV down.
The cost is already inside the number. Accrued expenses are deducted before the NAV is published, so the figure you see is net of what the fund charges to run itself. There is no separate bill, which is exactly why the cost is so easy to overlook — see what you actually pay in a mutual fund.
When NAV is published
Once per business day, after markets close and the fund values its holdings. A mutual fund NAV does not tick through the day the way a share price does — there is one value per scheme per day. Weekends and market holidays produce no new NAV, which is why a Saturday glance at your portfolio shows Friday’s figure.
AMFI publishes NAVs for every scheme daily, and each AMC publishes its own. Any figure you see on any platform ultimately traces back to that published data.
Which day’s NAV applies to your transaction
This is the question sitting behind “why did my order get a different NAV than the one I saw?”
The rule is not “the NAV on the day you tapped confirm”. NAV applicability for mutual fund transactions is governed by SEBI’s uniform cut-off timing rules, consolidated at paragraph 8.4 of SEBI’s Master Circular for Mutual Funds. The principle those rules set is that the applicable NAV depends on when the money is actually available for utilisation by the scheme, read together with the cut-off time that applies to that scheme — not simply on when the application was submitted.
In practice three things have to line up on the same business day: a valid application, the funds credited and available to the scheme, and both of those falling before the applicable cut-off. Miss any one of the three and the transaction takes the next business day’s NAV.
Cut-off times are not the same for every scheme — liquid and overnight funds follow their own rules, separate from equity, debt and hybrid schemes. We have deliberately not printed a clock time on this page. The operative times are set by SEBI and restated in each scheme’s information document, and the time that binds your transaction is the one in that document, so that is where to check it.
So a payment that settles overnight is usually allotted at the next business day’s NAV even if you ordered in the morning — and a small gap between the NAV you expected and the one you got is normal mechanics, not an error.
Why a low NAV does not mean a fund is cheap
A low NAV does not mean a fund is cheap, and a high NAV does not mean it is expensive. This is the single most common misunderstanding about mutual funds, and it comes from importing an intuition about share prices, where a low price can genuinely signal a cheap valuation.
NAV carries no such information. Two schemes holding identical portfolios can have completely different NAVs purely because one launched earlier, or has been running longer, or declared dividends along the way.
Work it through with ₹10,000. A scheme at ₹20 gives you 500 units; one at ₹400 gives you 25. If both portfolios rise 10%, the first NAV becomes ₹22 and the second ₹440 — and both holdings are worth ₹11,000. Identical rupee exposure, identical outcome. The number of units you own is not a measure of how much you own.
The corollary matters during new fund offers, where units are typically offered at ₹10. That ₹10 is a starting convention, not a discount. What should decide the question is what the scheme holds, what it costs to run, and whether its category suits your horizon — how to choose a mutual fund sets out what to look at instead.
NAV versus market price
For an open-ended mutual fund there is no market price. You are not buying units from another investor; the scheme creates units for you, and redeems them from you, at the applicable NAV. Demand for the scheme does not move that number.
Exchange-traded funds are the exception worth knowing. An ETF trades on an exchange through the day, so it has a live market price that can sit a little above or below its underlying NAV. For everything else on a platform like this one, NAV is the transaction value.
NAV in a SIP
A SIP is a method of investing a fixed amount at a fixed interval. Because the amount is fixed and the NAV is not, each instalment buys a different number of units. Lower NAV, more units; higher NAV, fewer.
An illustration, using made-up NAVs purely to show the arithmetic:
- Month 1 — NAV ₹40.00 — ₹5,000 buys 125.00 units
- Month 2 — NAV ₹50.00 — ₹5,000 buys 100.00 units
- Month 3 — NAV ₹32.00 — ₹5,000 buys 156.25 units
Three instalments, ₹15,000 invested, 381.25 units held. The average cost per unit works out to ₹39.34, while the simple average of the three NAVs is ₹40.67. The fixed rupee amount bought more units when units were cheaper, and that is the whole of what people mean by rupee cost averaging. It is arithmetic that follows from investing a fixed sum at varying prices — not a strategy layered on top, and not a protection against a falling market. SIP versus lump sum covers what it does and does not achieve.
Which NAV does each instalment get? The same rule as any other purchase: realisation of funds, read with the scheme’s cut-off. This is why instalments in the same SIP are allotted at NAVs a day apart from what you might have assumed, and why the NAV on your SIP date and the NAV in your statement are sometimes not the same number. If you want to size an instalment before you start one, the SIP calculator does that arithmetic — on an assumed rate you choose, not a forecast.
NAV when you redeem
Redemption works the same way in reverse: your units are valued at the applicable NAV for that transaction, and the proceeds are what remains after any exit load and applicable taxes. How to redeem mutual funds covers the timelines and the deductions in full.
Frequently asked questions
What is NAV in a mutual fund?
NAV, or net asset value, is the per-unit value of a mutual fund scheme on a given day. It is calculated as the scheme’s total assets minus its total liabilities, divided by the number of units outstanding, and it is published once per business day.
How is NAV calculated?
Total assets minus total liabilities, divided by units outstanding. Accrued expenses are included in the liabilities, so the published NAV is already net of the scheme’s running costs.
Is a fund with a lower NAV better to buy?
No. NAV tells you nothing about whether a scheme is attractively priced. A new fund offer at ₹10 is not cheaper than an established scheme at ₹400. Invest the same amount in each and your rupee exposure is identical; only the unit count differs.
What is NAV in a SIP?
It is the per-unit value at which each instalment is allotted units. Because a SIP invests a fixed rupee amount, a lower NAV buys more units that month and a higher NAV buys fewer, so you accumulate units at many different values over time.
Why did my SIP instalment get a different NAV than I expected?
Units are allotted at the NAV applicable to the transaction under SEBI’s cut-off timing rules, which turn on when the funds became available to the scheme rather than on the date the SIP was set up. A difference of a business day between the date you expected and the NAV applied is normal.
Why did the NAV not change today?
NAVs are declared on business days after market close. Weekends and market holidays produce no new NAV, so the last published figure stands until the next business day.
Is NAV the same as market price?
For an open-ended mutual fund, yes in effect — you transact at the applicable NAV, not at a price set by other buyers and sellers. Exchange-traded funds are different: they trade on an exchange and their market price can diverge from their NAV.
Does a falling NAV mean I have lost money?
Your holding is worth less than it was, which is a real change in value, though it is realised only when you redeem. Whether that matters depends on the horizon you set at the start. A falling NAV is also the point at which a fixed SIP instalment buys more units.
Where can I check a scheme’s NAV?
AMFI publishes the daily NAV of every scheme, and each AMC publishes its own. Your account statement shows the NAV at which each of your transactions was allotted.
Mutual fund investments are subject to market risks. Read all scheme-related documents carefully. This article is educational and is not investment advice or a recommendation of any scheme.