How to Calculate Net Asset Value (NAV) in Mutual Funds

Mutual funds invest the money collected from investors in the securities markets. Since the market price of securities changes every day, the NAV of a scheme also changes on a day-to-day basis.

The NAV is calculated every day after the market closes, either by the mutual fund house or by the accounting firm appointed by the fund house. Let us calculate the Net Asset Value (NAV).

How to Calculate Net Asset Value (NAV) in Mutual Fund

What is NAV, and when is it calculated? Net asset value is the market value per unit of the mutual fund. NAV is calculated after the end of the trading day.

It is the price at which investors buy or sell (redeem) units from a mutual fund company. NAV is calculated in the following manner which we are discussing below:

NAV is calculated as

(Total assets – Liabilities) / Number of units outstanding = Net asset value (NAV)


(Total Assets – Liabilities)/Number of Outstanding Units = Net Assets Value (NAV)

• Total assets = the total value of all cash and securities.

• Total Liabilities = All the liabilities like total expenses etc.

• Number of units outstanding = units that are currently available.

• NAV is calculated at the end of each trading day.

The assets of a mutual fund scheme are divided into securities and liquid cash. Securities include equity, debentures, bonds and commercial papers. Interest and dividends earned are also part of assets.

NAV reflects the performance of the Mutual Fund scheme. It shows investors which funds are performing well and which are not.

It provides information about the market performance of that mutual fund which is very helpful for investors in making investment decisions.

Since, the NAV value is calculated at the end of each trading day, the price at the time of buying a mutual fund is the previous day’s price.

The estimated profit/loss during a given period can also be calculated by comparing the past NAV with the current NAV of the mutual fund.

Total asset value differs from a mutual fund’s net asset value.

The total asset value includes its cash, stocks and bonds, all taken at market value or the mutual fund’s closing price. All interest earned by the fund, its liquid assets and dividends is also included in the net asset value.

Let us understand the NAV calculation with an example.

David wants to invest in mutual funds but whenever he talks to his friends the term NAV confuses him. After doing a little research, he understood the term NAV and its meaning. Net asset value is the price per unit of a mutual fund unit.

Now David wants to invest in mutual funds. As of today, the net worth of (asset-liability) is 100 cr and the total number of units held by multiple investors is 10 cr. Hence, the net asset value for that day would be ₹ 10.

If David invests ₹ 5,000 in a mutual fund, he will get 500 units of that mutual fund. After a few days, the NAV goes down to ₹12. He wants to sell his units.

The total cost of those units is 500 units X ₹ 12 = ₹ 6,000. He will get 6,000-5,000 = ₹ 1,000 as profit.

The NAV of a mutual fund is an indicator of its market value. Hence, the Net Asset Value (NAV) can be looked at to assess the current performance of a mutual fund.

An investor can calculate the value over time by determining the percentage increase or decrease in the NAV of a mutual fund.

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This blog post taught you how to calculate Net Asset Value with an example. This information can benefit your investments and help you view and analyze the fund performance by current NAV.

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