The investment strategies in India have evolved and this has made investors keen to look for newer ways of investment to save their money and attain benefits from it. But with tons of investment options in the market, making the right decision can be tough. Net Asset Value or Nav in mutual funds is one of the factors that require great financial knowledge before proceeding with an investment. In simple terms, nav is the per unit price of schemes in mutual funds.
NAV In mutual funds:
NAV is applied to find the valuation and pricing of an asset by dividing the difference between assets or liabilities by the total number of units held by an investor. In other words, the value of each unit of a fund is determined by nav. It is an important tool and is used for managing the fund units.
Proper research by investors should be done on the various mutual funds available in the market. And the calculation of the nav value of a fund should be done before investing in it. To find the overall performance of a unit, determining the nav value is crucial. A lower nav will mean that a fund has a lesser value and a higher nav indicates that the fund has a large market value which can be compared with the nav of other mutual funds.
There is no fixed value of a nav as it increases with the growth of a fund. The net value asset of a scheme is released by the fund houses at the end of each day and investors can keep track of it as if it reflects the market price of one unit of the mutual fund. With various tools available online, the calculation of nav has become easier and more accurate. A higher nav in mutual funds indicates that the fund has a large market value.
Role of NAV In determining the performance of a fund:
The net asset value is not just limited to the selling and buying price of units of a fund, it also determines the overall performance of the schemes. This means that to find how a particular scheme is performing, the nav of other funds or schemes can be compared before investing in it. This is a wise way to start an investment in mutual funds. Investors get a clear-cut idea about how many units of a particular fund will be allotted to them for the amount that they have invested. But sometimes even the net asset value of schemes does not offer good investment options. A close look at the metrics or factors that determine the growth of a nav should also be kept.
Conclusion:
To conclude, it can be said that the nav value is crucial as it determines the worth of each unit of a fund. However, the actual market value of a fund may slightly differ from the nav of the fund and it represents a buying or selling opportunity.
Disclaimer
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
