InvestorQ : What is NAV of mutual funds? Is it similar to what we know as stock price?
Mahima Roy made post

What is NAV of mutual funds? Is it similar to what we know as stock price?

Answer
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Ria Jain answered.
1 year ago


NAV means Net Annual Value of a mutual fund. It is basically the price at which a single unit of a mutual fund is traded. 
Stock price v/s NAV of mutual fund:

NAV is generally confused as stock price as it is declared every day, just like stock price, but it is entirely different. The stock price is one of the important factors because it is an indication of the performance of the company’s share on a trading day. With the fluctuation in the market, the stock price moves up or down, but the price is available throughout the day.

A mutual fund, however, invests in multiple assets. These may include stocks bonds or a combination of both. The NAV of the fund hence is based on all its underlying assets. Let us see how it is calculated:
NAV=(Assets-Liabilities)/Number of outstanding units.

Thus, the NAV of a mutual fund does not give any idea of the daily performance of the fund. It is rather, a reflection of the basic worth of the fund. Therefore, when investing in a mutual fund any increase or decrease does not influence purchase decision as it is nothing but performance of the fund.