Investors in mutual funds buy and sell units at the applicable net asset value (NAV) of the scheme. The NAV for a purchase transaction depends upon the type of scheme, the day and time of making the application and the amount invested.
Type of scheme
The rules, defined by capital markets regulator Securities and Exchange Board of India, distinguish between liquid and overnight funds on the one hand and equity and debt funds on the other.
The applicable NAV for purchases in liquid and overnight funds are historical NAVs—the NAV of the previous business day—provided certain prescribed conditions are met. This means that the investors know the NAV they are going to get at the time of making the investment.
