What is Nav in Mutual Fund with Example

What is Nav in Mutual Fund with Example ?

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Navigating the world of investments can be daunting, but understanding key concepts like Net Asset Value (NAV) in mutual funds can make the journey smoother. In this guide, we’ll delve into what NAV is, how it’s calculated, and its significance for investors, using clear examples to illustrate each point.

What is NAV?

NAV, or Net Asset Value, is a crucial metric used to determine the per-share value of a mutual fund. Essentially, it represents the fund’s assets minus its liabilities, divided by the total number of outstanding shares. This calculation gives investors an insight into the current value of each unit of the fund.

How is NAV Calculated?

Calculating NAV involves a straightforward formula:

How is NAV Calculated

The market value of assets includes all the securities, cash, and other holdings within the mutual fund’s portfolio. Liabilities encompass any outstanding expenses or debts owed by the fund. By subtracting liabilities from assets and dividing by the number of shares outstanding, we arrive at the NAV per share.


Let’s consider an example to clarify the concept. Suppose a mutual fund has £10 million in assets, £1 million in liabilities, and 1 million shares outstanding. To calculate NAV:

Example NAV

So, the NAV per share in this scenario would be £9.

Significance of NAV for Investors

NAV serves as a reference point for investors to evaluate the current value of their investment in a mutual fund. However, it’s essential to note that NAV alone does not determine the profitability of a fund. Factors such as fund performance, expenses, and market conditions also play a significant role.


Understanding NAV is crucial for any investor looking to navigate the world of mutual funds. By grasping how NAV is calculated and its significance, investors can make informed decisions about their investments. Remember, while NAV provides valuable insight, it’s just one piece of the puzzle in the broader landscape of investment analysis.

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