Skip to content

Net Asset Value (NAV): Understanding the Value of Your Investments

Net Asset Value (NAV)

Net Asset Value (NAV) represents the value of an entity’s assets minus its liabilities, divided by the outstanding shares. It serves as a crucial metric for assessing mutual funds and exchange-traded funds (ETFs).

Let’s dive into the details:

What Is NAV?

NAV is the per-share value of a fund’s assets, excluding its liabilities.

For Divadhvik, it’s calculated by dividing the total value of our portfolio (assets minus liabilities) by the number of outstanding shares. This calculation provides an overview of the fund’s value at a specific point in time.

AspectNet Asset Value (NAV)Market Price
DefinitionRepresents the per-share value of a fund’s assets (excluding liabilities). Calculated daily.The actual trading price on stock exchanges.
CalculationBased on the total value of the portfolio (assets minus liabilities) divided by outstanding shares.Determined by supply and demand dynamics in the market.
PurposeHelps investors understand the intrinsic value of their investment.Indicates the price at which shares are bought or sold in real-time.
Mutual FundsNAV and market price are generally the same.May differ slightly due to trading activity.
ETFsNAV and market price can differ due to supply and demand.Traded like stocks, with market prices fluctuating throughout the day.
Divadhvik’s AppDownload the Divadhvik – Mutual Fund & SIP app for seamless portfolio management.Explore mutual funds, track your portfolio, and plan your financial goals effortlessly.

How is the NAV useful to investors?

Finally, how does the NAV or net asset value affect the mutual fund investor? The net asset value (NAV) of a mutual fund is similar to a company’s book value.

The NAV is useful to investors in five ways.

  • Net Asset Value (NAV) measures the wealth effect over time. For example, if a fund’s NAV increased from Rs 100 to Rs 118 in one year, this represents an 18% return on investment. 
  • Net Asset Value enables comparison. While you cannot compare NAV directly, you may compare the returns generated by NAV. This facilitates the selection of funds both within and beyond categories.
  • Because portfolio disclosures are only made once a month, the net asset value is an important way for the fund to communicate with its investors about how it is performing.
  • NAV can function as an early warning system for investors. For example, if the rise or decline in NAV of an equity fund deviates from the index, investors should pay greater attention.
  • NAV calculates return per unit of risk using methods such as the Sharpe and Treynor ratios.


Invest confidently with Divadhvik! Download our app, manage your mutual fund portfolio, and feel free to consult us for any trading queries. Your financial goals are within reach!

Feel free to explore our app and take advantage of seamless portfolio management.

 If you have any further requests or need additional information, don’t hesitate to ask! 😊🌟