What Would Your Boss Expect You To Know About Meaning of Net Asset Value (NAV)?
Net Asset Value (NAV) denotes the performance of a particular mutual fund scheme.
As we read in our earlier posts on “Why people think mutual funds is a great idea?” that mutual funds invest in the securities market.
Also Read: Basic Facts You Must Know About Mutual Fund Schemes
Hence, the NAV of a mutual fund scheme means the market value of the securities held by the respective mutual fund scheme.
The market value of securities varies on a daily basis and so does the value of a mutual fund scheme.
NAV serves as an indicator to determine the value at which the mutual funds are working in the market.
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By comparing the NAV of various funds, the investor is able to identify as to invest in, which mutual fund would be the best deal.
To compare the NAV of various mutual funds, you can download Kredent Money App
Now, let us understand the calculation of NAV per unit with the help of an example:
Example:
The market value of a mutual fund scheme is Rs. 100 lakh
Total units issued = 10 lakh units of Rs. 10 each
NAV of a mutual fund = Market value of securities
( Per unit ) Number of units
= 100 lakh/10
= Rs. 10 per unit
Bottomline:
The pricing of the securities depends upon the market volatility.
Mutual funds, mostly, distribute all their income.
Instead of looking at the higher or lower Net Asset Value, an investor should focus on the total return received from the mutual fund scheme.
Though Net Asset Value is not the only parameter for determining the investment in any mutual fund scheme, it is always advisable to seek professional advice for taking any such decision.
Read More: A Brisk Understanding On How To Invest In Mutual Fund Scheme
So this time in case your boss asks you what NAV is, you can surely boast your knowledge post reading of this article.
Happy Learning!!
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