When investing in mutual funds, one term you’ll often come across is NAV, or Net Asset Value. It represents the per-unit market value of a mutual fund and helps investors understand how much their investment is worth at any given time. In simple terms, NAV is the total value of a fund’s assets minus its liabilities, divided by the number of units outstanding.

For example, if a mutual fund holds stocks, bonds, and cash worth ₹100 crore, and has liabilities of ₹2 crore with 10 crore units, the NAV would be ₹9.80 per unit. This value changes daily based on market performance, interest rates, and other economic factors.

Understanding NAV in mutual fund is crucial because it determines the price at which you buy or sell units. However, a common misconception is that a lower NAV means a cheaper or better investment — which isn’t true. The fund’s performance, not its NAV, defines its potential for growth.

In the case of a liquid fund, which invests primarily in short-term money market instruments, the NAV usually changes only slightly day to day. These funds focus on stability and liquidity rather than high returns, making them ideal for parking surplus cash for short durations.

In essence, NAV serves as a snapshot of a fund’s current worth and helps investors track the performance of their investments. Whether you invest in equity, debt, or liquid funds, understanding NAV ensures more informed and confident financial decisions.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.