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NET ASSET VALUE (NAV)

NAV stands for Net Asset Value. The performance of a mutual fund scheme is denoted by its NAV per unit.

NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on a given date. For example, if the market value of securities of a mutual fund scheme is ₹200 lakh and the mutual fund has issued 10 lakh units of ₹ 10 each to the investors, then the NAV per unit of the fund is ₹ 20 (i.e., ₹200 lakh/10 lakh).

Since market value of securities changes every day, NAV of a scheme also varies on day-to-day basis.

NAVs of mutual fund schemes are published on respective mutual funds’ websites as well as AMFI’s website daily.

Unlike stocks, where the price is driven by the stock market and changes from minute-to-minute, NAVs of mutual fund schemes are declared at the end of each trading day after markets are closed, in accordance with SEBI Mutual Fund Regulations. Further, Units of mutual fund schemes under all scheme (except Liquid & Overnight funds) are allotted only at prospective NAV, i.e., the NAV that would be declared at the end of the day, based on the closing market value of the securities held in the respective schemes.

A mutual fund may accept applications even after the cut-off time, but you will get the NAV of the next business day. Further, the cut-off time rules apply for redemptions too.


HOW IS THE APPLICABLE NAV DETERMINED?

Liquid Funds/Overnight Funds All Other Schemes*
Subscription
  • Where the application is received up to 1.30 p.m. on a day and the funds are available for utilization before 1.30 p.m. without availing any credit facility, the closing NAV of the day immediately preceding the day of receipt of application.
  • Where the application is received after 1.30 p.m. on a day and funds are available for utilization on the same day without availing any credit facility, the closing NAV of the day immediately preceding the next business day; and
  • Irrespective of the time of receipt of application (before or after 1.30 p.m. on a day), where the funds are not available for utilization before 1.30 p.m. without availing any credit facility, the closing NAV of the day immediately preceding the day on which the funds are available for utilization.
  • Where the application is received up to 3:00 p.m. and funds are available for utilization before 3:00 p.m., the closing NAV of the day on which the application is received.
  • Where the application is received after 3:00 p.m. and the funds are available for utilization, closing NAV of the next business day.
  • Irrespective of the time of receipt of application (before or after 3:00 p.m.), where the funds are not available for utilization, the closing NAV of the day on which the funds are available for utilization before cut-off time of 3.00 p.m.
Redemption
  • Where the application is received up to 3.00 pm
    – the closing NAV of day immediately preceding the next business day; and
  • Where the application is received after 3.00 pm
    – the closing NAV of the next business day.
  • Where the application is received up to 3.00 pm – closing NAV of the day on which the application is received; and
  • Where the application is received after 3.00 pm – closing NAV of the next business day.

*other than Liquid Funds & Overnight Funds

WHAT IS SALE AND REPURCHASE PRICE?

Sale Price

  • Sale Price is the price payable per unit by an investor for purchase of units (subscription) and/or switch-in from other schemes of a mutual fund.
  • SEBI vide circular no. SEBI / IMD / CIR No. 4 / 168230 / 09 dated June 30, 2009 has abolished Entry Load for all mutual fund schemes.
  • Hence, during the New Fund Offer (NFO), the Sale Price per unit is at Face Value per unit specified in the respective Scheme Information Document (SID) and Key Information Memorandum (KIM)
  • During the ‘Ongoing Offer’ period (i.e., the date from which the scheme re-opens for subscriptions/redemptions after the closure of the NFO period.), the units may be purchased at NAV i.e., the Sale Price per unit is equivalent to applicable NAV on the date of subscription

Repurchase/Redemption Price

  • The Repurchase/Redemption Price is the price per Unit at which a Mutual Fund would ‘repurchase’ the units (i.e., buys back units from the investor) upon redemption of units or switch-outs of units to other schemes/plans of the Mutual Fund by the investors, and includes Exit Load, if / wherever applicable.
  • Redemption price is calculated as follows:
  • Redemption Price = Applicable NAV*(1- Exit Load, if any) For Example: If the Applicable NAV is ₹10 and Exit Load is 2%, then the Redemption Price will be = ₹10* (1-0.02) = ₹9.80

It may be noted that an AMC / Trustee has the right to modify existing Exit Load structure and/or to introduce Exit Loads subject to a maximum limit prescribed under the Regulations.

Any change in Load structure will be effective on prospective basis and will not affect the existing mutual fund units in any manner.

As per SEBI (Mutual Funds) Regulations, 1996, in respect of Open-Ended Schemes, Repurchase Price (commonly referred to as Redemption price) shall not be lower than 95% of NAV.

It may be noted that units of Closed Ended Schemes cannot be Repurchased prematurely.