What is NAV? What is the importance of NAV in Mutual Fund?
If you invest in mutual funds or are thinking about investing then you should know about NAV. What is NAV? What is the importance of NAV in all mutual funds? Do mutual funds with higher NAVs give higher returns or mutual funds with lower NAVs give higher returns? Today we will try to explain to you in this post in easy Hindi language what is the NAV of a mutual fund?
What is NAV in mutual funds (Net Asset Value) means the value of total assets. Just as a stock is prized in the context of a stock, in the context of a mutual fund, the price of a unit of the fund is measured in its NAV. The expenditure of 1 day of running the Mutual Fund through the expense ratio is taken out, and the NAV of that day is then calculated.
To calculate Nav, the cost of running a mutual fund is deducted from the total investment (whether stock, bond or deposit etc.) of that mutual fund. And then the money that is saved is divided by the number of units in that mutual fund (which is held by different investors in that mutual fund). Whatever value is thereafter is the NAV of this mutual fund.
NAV is the total value per unit of any fund. The NAV is decided by the AMC (Asset Management Company) at the end of business every day. The base value of NAV in Mutual Fund is Rs 10 or Rs 100. According to the fluctuations of the fund market at the end of business every day, the value of NAV in the mutual fund keeps on decreasing.
NAV shows the growth of any mutual fund You can find out how the growth of a mutual fund has been by looking at the nav of a mutual fund. If you invest Rs 120 per unit NAV in a mutual fund, and after one year the NAV of that unit becomes Rs 150, then you can say that the fund has grown by 25%. It is wrong to assume that a mutual fund with a lower NAV gives higher returns and a mutual fund with a higher NAV gives lower returns. By looking at the NAV of any mutual fund, it can be found out how the fund has returned in the past. But we cannot say how the fund will return.