You might have come across NAVs when buying the units of a mutual fund. A mutual fund NAV is more than just a book value. There might be some things you might not know about the NAVs of mutual funds, collected from NAV’s history and some of the latest NAV facts.
Here are 10 things to know about NAV which can enrich your knowledge about investing:
#1 NAV and market value
The NAV or Net Asset Value can be defined as the sum total of the market value of all the shares of a portfolio, divided by the total number of outstanding units. NAV is also known as the book value of the unit. You can check NAV online on a trusted financial website.
#2 NAV and fund value
Mutual funds usually begin with a unit cost of Rs. 10. This value grows when the assets under the fund grow under the management. Since the value of a mutual fund grows under the company’s management, the more popular the fund, the higher will be its NAV.
#3 NAV and changing frequency
When it comes stocks, their values can change within seconds. Unlike stocks, the value of NAVs does not change throughout the day.
#4 NAV and daily value
NAV can change from day-to-day since its value is calculated every day after the markets close. Therefore, if you are purchasing the fund units in the morning, you may be purchasing it at a price that will be decided only after the markets close later in the day. Conversely, if you buy fund units in the evening, you will get a NAV allotment of the next business day. This will also hold for redemption.
#5 NAV and relevancy
NAV is slightly irrelevant when it comes to choosing mutual funds, as a higher … Read more ...