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NAV Computation
NAV Computation Process
Learning Outcome
5
Interpret NAV to assess fund value.
4
Analyze factors affecting NAV.
3
Calculate NAV per unit.
2
Identify fund assets and liabilities.
1
Understand the concept and importance of NAV.
The NAV Formula
The Net Asset Value of a mutual fund scheme is computed using the following formula:
NAV = (Total Assets − Total Liabilities) ÷ Total Outstanding Units
where:
Total Assets = Market value of all securities held + Accrued income (dividends, interest) + Other receivables + Cash & cash equivalents
Total Liabilities = Accrued expenses (management fees, custodian fees, registrar fees) + Payables + Other outstanding liabilities
Total Outstanding Units = Total number of units that have been issued and are currently held by investors
Breaking Down: Total Assets
Breaking Down: Total Liabilities
Step-by-Step NAV Computation
Let's walk through the process in four clear steps:
Mark the entire portfolio to market at end-of-day prices (closing prices on BSE/NSE).
Add all accrued income (interest, dividends receivable) and cash balances to get Total Assets
Subtract all accrued expenses and outstanding liabilities to arrive at Net Assets.
Divide Net Assets by the total number of outstanding units to get the NAV per unit.
Worked Example 1: Basic NAV Computation
Scheme Details — Sunrise Equity Fund (as on 30 May 2026)
Market value of equity portfolio: ₹90,00,000
Accrued dividends receivable: ₹ 1,20,000
Cash & equivalents: ₹ 3,80,000
Accrued management fee (payable): ₹50,000
Custodian & other fees (payable): ₹ 10,000
Total Outstanding Units: 10,00,000 units
Solution:
This NAV is below face value (₹10) because the portfolio has declined from the NFO price — a realistic scenario in equity markets.
Total Assets = Equity portfolio + Dividends + Cash
= 90,00,000 + 1,20,000 + 3,80,000
= ₹95,00,000
Total Liabilities = Management fee + Other fees
= ₹60,000
Net Assets = Total Assets − Total Liabilities
= ₹95,00,000 − ₹60,000
= ₹94,40,000
Outstanding Units = 10,00,000
NAV per Unit = ₹94,40,000 ÷ 10,00,000
= ₹9.44 per unit*
Factors That Affect Daily NAV Movement
Rise or fall in market prices of equities/bonds held by the fund
Accrual of interest income on debt securities (pushes NAV up)
Daily accrual of fund expenses (pushes NAV down)
Currency movements (for international or overseas funds)
Corporate actions — dividends received, bonus issues, rights
Fund inflows and outflows (new units issued or redeemed — but these do not directly change NAV; they change unit count proportionally)
Summary
5
Assets increase NAV; expenses reduce it.
4
NAV changes with market movements.
3
Liabilities include expenses and obligations.
2
Assets include investments, cash, and receivables.
1
NAV represents an investor's share of a fund's net value.
Quiz
Which of the following is considered a liability in NAV computation?
A. Cash balance
B. Dividend receivable
C. Market value of securities
D. Management fee payable
Quiz-Answer
Which of the following is considered a liability in NAV computation?
A. Cash balance
B. Dividend receivable
C. Market value of securities
D. Management fee payable
Fixed Income Portfolio Strategy - NAV Computation Process
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