Question 1

What is NAV?

Accepted Answer

Net Asset Value — the per-unit price of a mutual fund. NAV = (assets under management − liabilities) / total units outstanding. Updated daily after market close at 11 PM IST for equity funds, earlier for debt funds.

Question 2

How are units calculated?

Accepted Answer

Units = amount invested ÷ NAV at allotment. ₹10,000 invested on a day when NAV is ₹50 gives 200 units. Units are tracked to 4 decimal places.

Question 3

Why does the NAV drop on dividend day?

Accepted Answer

Dividend payout reduces fund assets — so NAV drops by the dividend amount. The dividend is paid to your account; the NAV-drop is paper-only. Net wealth is unchanged. Growth-option funds don't pay dividends and avoid this artefact.

Question 4

Does a low NAV mean the fund is cheap?

Accepted Answer

No — this is the most common myth. A fund's NAV is just an accounting number. A ₹500 NAV fund and a ₹50 NAV fund with the same future return give you the same percentage gain. NAV is not a price-to-earnings ratio.

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