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Net Asset Value, or NAV, is the market value of a fund unit. It is computed by subtracting the liabilities from the total assets and dividing by the total number of units.

It is known that the fund houses collect money from the investors and invest in various different securities such as bonds, stocks, etc. The total of the current value of all the securities, along with cash, is the total assets or the assets under management (AUM).

NAV= (Total assets – Liabilities) ÷ (Total Number of Units)

While investing in a mutual fund, an investor is required to put in the money that is equivalent to the NAV multiplied by the number of units he or she is willing to purchase. Moreover, if an investor is willing to invest a fixed sum of INR 5000, the fund provides the units infraction depending on the NAV applicable.

How and when is NAV computed?

NAV of a fund is computed based on the closing price of the security. Moreover, for all the open-ended funds, the NAVs are calculated daily. Funds may also calculate the NAV on a weekly or fortnight basis, depending on the objective and prospectus.

Applicability of NAV

A person can invest in a mutual fund on any business day of the year, but one may or may not get the same-day NAV. It could be yesterday, tomorrow’s, or today’s NAV. It depends on the time you submit your application and transfer the money to the fund house. This time is known as the cut-off time in a mutual fund, and it differs for the different types of funds.

Cut off timings for different types of funds

Given every fund has a different nature, the cut off schedule differs as per the category.

Category of fundCut off time
Liquid funds1.30 pm
Equity funds3 pm
Debt funds3 pm
Hybrid Funds (Debt oriented)3 pm
Hybrid Funds (Equity oriented)3 pm

Applicability of NAV while buying a mutual fund

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