Ten Things to Know About NAV
Investing Money

Ten Things to Know About NAV

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.

Ten Things to Know About NAV

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 or lower NAV does not necessarily help indicate how beneficial it will be for you. To know about the benefits, you will need to check the factors like the past performance of the fund. The NAV is mainly used when purchasing units of the mutual fund.

#6 NAV and timeframe

The NAV can be analysed over a specific period to get better insights on the performance of the mutual fund.

#7 NAV and purchase price

Looking at NAV’s history and facts one can see that in the past, the sale price of schemes was allowed to be higher than the NAV. This difference between the two prices was called as the Entry Load. In the same way, schemes were also allowed to keep the re-purchasing price lower than the NAV. This difference was termed as the ‘Exit Load’.

#8 NAV and holidays

All orders placed for mutual fund units on holidays will be carried out at a NAV price set on the next working day.

#9 NAV and time zones

Dealing with NAVs is prêtty simple, but you have to be cautious about time zones. For instance, if the ETF securities are held in a different time zone, the NAV …

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