In the context of a mutual fund, NAV means its net asset value per unit. Typically a mutual fun unit starts at Rs 10 when the fund is launched. As the fund appreciates in value through gathering investment returns, its net asset value keeps increasing. When a mutual fund declares its dividend, there will be a corresponding decrease of the net asset value.

If you are entering or exiting a fund, it is the NAV which decides the price. If an entry load is applicable, you will be charged that in addition at entry. Most funds also apply an exit load if you are redeeming your mutual fund units within short periods, typically 180 days from investing. In paying you the redemption amount, exit load is deducted from the applicable NAV of the redemption date.

The most important thing to remember for a mutual fund investor is that NAV is to be tracked for a particular fund only over different periods. If you compare NAVs of two different funds on a particular date, it is meaningless. The parameter to compare funds in that sense will be growth in NAV or in other words the returns.

In calculating net asset value- as the name signifies- the total value of invested money is calculated and from that all payments due to be paid are deducted and the end result is divided by the total number of the fund's units in existence. If a fund has earned 25% returns from inception on a particular date you will find its NAV has increased from Rs 10 to Rs 12.50.

In calculating NAVs, the fund's running costs are also deducted before dividing the result by the number of units. NAVs therefore are after paying all management expenses.

Newspapers, magazines and internet sites regularly publish daily NAVs of mutual fund schemes. If you wish to find out how your fund has been doing lately, you can find out its latest NAV and assess its performance.

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