HOW MUTUAL FUND NAV IS CALCULATED?

CALCULATION OF NAV

What is NAV? Simply put, NAV is the sum total of all the assets (like stocks, Deposits, Corporate bonds, Treasury bills etc.,of the mutual fund (at market price) less the expenses (fund manager fees, audit fees, registration fees among others); divide this by the number of units and you arrive at the NAV per unit of the mutual fund. An illustration may help to understand better.

NAV calculation :

Net Assets = Rs 128,000

Expenses = Rs 3,000

No. of Units = 1,250

NAV = (128000-3000)/6000 = Rs.100

And depending on the market values of the assets on all market days, the NAV may rise or fall. A mutual fund's relative performance depends on the asset allocation, stock selection, buying & profit booking at appropriate timings.

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MULLA : RIDING THE DONKEY BACKWARDS

One day Nasruddin Hodja was riding his donkey backward, facing towards the back. “Hodja,” the people said, “You are siting on your donkey backwards!”

“Oh no,” he replied, “It's not that I am sitting on the donkey backwards, the donkey is facing the wrong way.”