NAV (Net Asset Value), is the fund’s per share market value. It can be calculated by subtracting the sum value of liabilities from the sum value of assets. It can also be defined as the basic price at which the investors purchase fund units from a fund house or vend the units back to the mutual fund house. The NAV of a mutual fund is very important to investors as it tells them about the fund’s potential. But investors should keep in mind that it is not the sole factor upon which a mutual fund’s performance is judged.

Investors use NAV to recognize the most profitable investment options. In a large number of cases, the NAV is very similar to the book value of a company. The NAV of a mutual fund scheme also helps an investor to reconfigure the requirements of his current portfolio.


NAV cannot be calculated in between the ongoing market hours because the price of various kinds of financial securities changes every single minute. And if an investor decides to calculate NAV during the market hours, then he will be more than liable to incur huge losses on his investments. The NAV of a mutual fund scheme is to be calculated only when the market has closed. Because at the end of the market day, an investor will be able to assess the closing market price of the mutual fund scheme.

 In a few cases, the share price is mentioned on the stock exchange. The aforementioned scenario happens only in the case of “Corporates”. This “Price factor” does not stand on it’s own merit, rather it is dependent on two very important factors. The former factor is “A financial expert’s view on the future performance of the company” and the latter factor is the “Prevailing scenario of supply and demand”. So it can be said that a stock’s market price will vary from it’s book value. Thus in the case of financial instruments such as “Mutual Funds”, the concept of market value does not exist. So when mutual funds are being purchased at their NAV by an investor, they are actually being purchased at the book value by him.

Structure of “Mutual funds”

Mutual funds have always been a lucrative investment option for investors because of their ability to offer high returns. But when an investor has decided to invest in them, then he has also agreed to set his investment amount aside for a long period of time. Every mutual fund house has a financial goal. And the types of financial instruments in which a mutual fund house invests, will take the fund house either near it’s financial goal or away from it’s financial goal. A mutual fund house invests in various kinds of financial securities like stocks, bonds, etc.  The price of these financial securities is liable to go up and down during the market hours. So the fund house must make sure that it invests in those kinds of financial securities which leads to generation of a large amount of returns for it’s investors.


Yes NAV is very important for an investor but it is not the most important factor for him. Because the current and future performance of a fund cannot be solely judged on the basis of NAV. There a plethora of other factors that are considered by an investor, before investing in mutual funds.

 Methods to assess the past performance of a mutual fund

  • According to a large section of expert investors, the past performance of a mutual fund should be studied only from a long time perspective. This will help an investor to gain useful insights for his present investment decisions. The minimum time perspective should be of five years. If an investor is looking at the last ten years performance of a mutual fund, then he will able to draft his investment decision with utmost precision.
  • There is another method by which an investor can analyze the past performance of a fund. He can compare it’s previous years performance with a benchmark. This will help an investor to assess the requirement of his current portfolio. And it will also tell him about the particular category of a mutual fund, he should invest in.
  • The past performance of a fund manager must also be assessed by an investor. This will help an investor in choosing the right mutual fund house.

If a fund house manager has made a series of good investment decisions, then it will automatically result in a good amount of gains for the investors. The reason some fund managers have a strong record is that they are calm, patient, and follow a set of sound financial principles.      

The curious case of Low and High NAV in different schemes

The net asset value of different kinds of schemes becomes an irrelevant factor when the amount of profits is concerned. In a certain case, an investor can receive more units from his investment in scheme A than from his investment in scheme B. And in the same case only, an investor can also receive the same amount of returns from both schemes. So the NAV of each scheme becomes a redundant factor. If two different kinds of schemes have their portfolio build up in an identical way, then the variation in NAV will not matter provided both schemes deliver the same amount of returns.

What role does NAV play in the performance of a mutual fund?

Many investors tend to believe in the fact that a fund with a low NAV, will be an ideal investment option. This is thought by the investors because a low NAV, makes the fund seem a cheaper investment option to them. But an investor should always keep two things in mind. The former is that a low NAV does not mean that the fund is an ideal investment option and the latter is that the investor should not judge the performance and returns of a mutual fund, solely on the basis of NAV.

The NAV of a mutual fund is subject to change daily, as it is dependent on the conditions of the financial market.

The formula for calculation of NAV is

  NAV = (Assets – Liabilities) / Total number of outstanding shares

The top-performing mutual funds of 2020 are:-

  • TATA Digital India Fund.      
  • ICICI Prudential Technology Fund.      
  • SBI Technology Opportunities Fund.      
  • Aditya Birla Sun Life Digital India Fund.      
  • Franklin India Technology Fund.      
  • SBI Healthcare Opportunities Fund.      
  • Nippon India Pharma Fund.      
  • TATA India Pharma & Healthcare Fund.      
  • UTI Healthcare Fund.      
  • Kotak Tax Saver Fund.   

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