Net Asset ValueWednesday, October 28, 2009 2:42 pm
Net Asset Value is always mentioned when we talk about a mutual fund. It indicates the value of a fund’s assets after taking away its liabilities. An individual needs to divide the subtracted value by the number of units outstanding in order to calculate the exact value of it. Association of Mutual Funds of India has made it obligatory to announce NAVs of mutual funds every day.
It is employed to buy units of mutual funds. The units assigned to an investor are simply the sum to be allocated to be divided by the present Net Asset Value of the fund. It is estimated at the close of each trading day. As dividend paid is deducted, the Net Asset Value of the dividend option of a similar fund is lower than the growth option of the same fund.
The Net Asset Value of all strategies of all key fund houses is showcased every day on their individual websites. The value’s vacillation or its increase or decrease shows the performance of its fund against the yardstick it monitors.
The units to be assigned to an investor are determined after the close of a trading day in case of purchase or sell of a fund on a certain day. The redemption value is always lower than the Net Asset Value of the units multiplied by the Net Asset Value in case of a fund with an exit load, which is due to the exit load. Therefore, this is all about the Net Asset Value of a mutual fund.
As you know about NAV, you can easily direct the course of your mutual fund investment.