Short answer: A mutual fund’s net asset value, or NAV, is the value of one unit of the fund, expressed in rupees. It is found by subtracting total liabilities from total assets and dividing the result by the number of units outstanding, meaning the units that investors currently hold. The fund works out this figure once per business day, after the market closes.
Last reviewed: 10 November 2026
At a glance
| Term | What it means |
|---|---|
| Total assets | Market value of the fund’s holdings, cash, receivables and income accrued but not yet received |
| Total liabilities | Operating expenses, management fees and amounts payable to others |
| Units outstanding | The number of units held by investors |
| NAV per unit | (Total assets minus total liabilities) divided by units outstanding |
| Open-ended fund | Transacts with investors at NAV |
| Closed-end fund | Units trade on stock exchanges at market prices, which can differ from NAV |
What counts as the fund’s total assets?
Total assets are everything the fund owns, valued at what it would fetch in the market. This includes the market value of its securities, such as the shares and bonds it holds, along with its cash. It also includes receivables, which are amounts owed to the fund, and income accrued but not yet received, such as interest that has built up on a bond but has not yet been paid out.
Because securities are counted at market value, the total assets figure changes whenever prices change. The fund does not use the price it originally paid for a holding. It uses the value the holding has today.
What is subtracted from the total?
Liabilities are what the fund owes. For NAV purposes, they include the fund’s operating expenses, which are the day-to-day running costs, and its management fees, which are paid to the asset management company that runs the fund. They also include amounts payable to others, meaning money the fund has committed to pay but has not yet paid.
Subtracting these amounts matters. Every rupee of expense or fee that is owed but unpaid reduces the NAV, so the figure reflects what is left for unit holders after the fund’s obligations are met.
How is the per-unit figure worked out?
The fund divides the net value, which is assets minus liabilities, by the number of units outstanding. The result is the value of a single unit.
Hypothetical example (all figures invented for illustration): Suppose a fund holds securities, cash and receivables worth Rs 50 lakh in total. It owes Rs 2 lakh in expenses and fees. It has 10 lakh units outstanding.
- Net value: Rs 50 lakh minus Rs 2 lakh equals Rs 48 lakh
- NAV per unit: Rs 48 lakh divided by 10 lakh units equals Rs 4.80
Why does the NAV rise and fall?
The fund’s holdings are worth whatever the market says they are worth on a given day. When those holdings gain value, total assets rise and so does the NAV per unit. When they lose value, the NAV per unit falls.
Hypothetical example (all figures invented for illustration): Using the same fund, suppose its holdings rise in value by Rs 2 lakh, so total assets become Rs 52 lakh. Liabilities stay at Rs 2 lakh and units stay at 10 lakh.
- Net value: Rs 52 lakh minus Rs 2 lakh equals Rs 50 lakh
- NAV per unit: Rs 50 lakh divided by 10 lakh units equals Rs 5.00
The NAV has moved from Rs 4.80 to Rs 5.00 without any new money coming in or going out. The catch is that the same mechanism works in reverse. If the holdings lose value, the NAV falls even though the investor has not sold anything.
Why is NAV calculated only once a day?
NAV is calculated once per business day, after the market closes. Share prices on the stock exchange change continuously during trading hours. A single daily figure means every investor who transacts that day gets the same price, which keeps the figure uniform.
The trade-off is that the NAV you see on any given day reflects the close of the previous market session, not the moment you place an order.
Does a lower NAV mean a cheaper fund?
No. A high or low NAV says nothing about how well a fund has performed or whether it is cheaper. The NAV per unit depends on how the fund was set up and how many units have been issued, so two funds with the same underlying holdings can show very different NAVs.
What a lower NAV does mean is that the same amount of money buys more units.
Hypothetical example (all figures invented for illustration): An investor puts Rs 10,000 into Fund A at a NAV of Rs 10, receiving 1,000 units. The same Rs 10,000 put into Fund B at a NAV of Rs 100 would buy 100 units. Both investors have paid the same amount, and the number of units alone does not show which fund has done better.
How do closed-end funds differ?
Open-ended funds transact with investors at NAV. Closed-end funds work differently. Their units trade on stock exchanges at market prices, set by buyers and sellers during trading hours.
A closed-end fund’s unit can trade at a premium, meaning above its NAV, or at a discount, meaning below its NAV. So the price you pay or receive for a closed-end unit may not match the NAV that was calculated after the market closed. Checking the NAV alone does not tell you the price you will actually get on an exchange.
Frequently asked questions
Is NAV the same as the price of a mutual fund?
For an open-ended fund, transactions happen at NAV, so the two are the same for that purpose. For a closed-end fund, units trade on stock exchanges at market prices that can be at a premium or discount to NAV.
Why is NAV calculated only once a day?
NAV is calculated once per business day after the market closes. Share prices change continuously during trading hours, and a single daily figure keeps the value uniform for everyone.
Does a higher NAV mean a better fund?
No. A high or low NAV does not indicate how well a fund performs or whether it is cheaper. A lower NAV only means more units for the same amount invested.
What is included in liabilities when calculating NAV?
Liabilities include the fund’s operating expenses, management fees and amounts payable to others. These are subtracted from total assets before dividing by the number of units outstanding.
Sources and last check
Facts in this article were checked against the sources below on 10 November 2026. Rules and figures can change; check the primary source before acting.
- icicidirect.com (broker education)
- kotakneo.com (broker education)
- upstox.com (broker education)
- groww.in (broker education)
This article is general information, not investment advice. MyFinanceBandhu is not a SEBI-registered investment adviser.