The net asset value (NAV) is the total value of an entity’s assets minus the entire value of its liabilities, and it indicates the entity’s net worth. The NAV reflects the per share/unit price of a mutual fund or an exchange-traded fund (ETF) on a given date or time, and is most often used in the context of a mutual fund or an exchange-traded fund.
In mutual funds, ETFs, and indexes, net asset value is widely utilized to discover possible investment opportunities. Net asset value may also be used to look at the holdings in one’s own portfolio. An investment account is required to invest in any of the aforementioned assets.
NAV (Net Asset Value) is the total value of assets being managed in a mutual fund divided by the number of units of the mutual fund.
The NAV for Open ended & close ended funds are calculated daily; but the declaration of NAV in respect of open ended funds is done daily.whereas in case of close ended funds it will be as per what is mentioned in the offer document.
The NAV has to be calculated daily and uploaded on to the site of AMFI (Association of mutual funds of India)
It is calculated as:
Assets - liabilities/ Total number of funds outstanding units.
For example, total of 100 people have invested 100 each during NFO and the number of units issued (of fv 10) will be 1000. Suppose the fund invests in 15 companies of different share price. The market cap of each company if grows by 100% by 5 years, the value of each unit would now be 20.(I.e. 20000/1000= total market cap/total number of units). Thus the NAV of the fund after 5 years is 20.