ET explains how a mutual fund investor should interpret Net Asset Value:
1. What is NAV? Net asset value (NAV) represents a fund's per unit market value. This is the price at which investors buy fund units from a fund company or sell it back to the fund house. It is calculated by dividing the total value of all the assets in a portfolio, minus all its liabilities. The NAV of a fund is calculated by the mutual fund house itself or by an accounting firm hired by the mutual fund.
2. When is NAV calculated? NAV calculation is impossible during market hours as the price of the underlying holdings (say stocks) changes every minute. NAV is calculated at the end of every market day, after taking into account the closing market prices of the securities that the fund or scheme holds.
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