NAV, short for Net Asset Value, is the per-unit price of a mutual fund scheme on a specific day. It is calculated using the formula NAV = (Total Assets − Total Liabilities) ÷ Total Units Outstanding. Example: a fund with ₹200 crore in assets, ₹2 crore in liabilities, and 10 crore units outstanding has a NAV of ₹19.8. An investment of ₹10,000 at this NAV gets the client nearly 505 units.

Neither. NAV level has no impact on returns. A high NAV reflects a fund that has compounded over time. A low NAV could mean a newer fund or one that has underperformed. The quality of the fund should be considered more important than the NAV of the fund. To obtain good results, always select a fund with a good track record, good management and that fits your financial goals.

Unlike share prices that fluctuate during the trading day, the NAV is determined on a daily basis at the end of the day. NAV is not a one-size-fits-all figure. It depends on the type of fund. Daily NAV for open-end Mutual Funds is determined daily based on the market values at the end of the day. Periodic NAV for closed-end funds may be required to have their NAV estimated weekly or monthly due to the nature of their structure.

A high NAV generally means the fund has been around for a while and has grown. That is a positive sign of historical compounding. But it does not mean the fund is expensive or that future returns will be lower. Past NAV growth and future NAV growth are two separate things entirely.