There are some terminologies in mutual funds you should know in detail. NAV is one among them and still good numbers of people are unaware of the important facts about it. Most of them think that NAV and Stock value are similar in nature. But this is certainly wrong and here are the important facts that give you a clear idea about NAV.
Price of per unit of mutual fund
NAV is the net asset value and it denotes just the price per unit of the mutual fund. Now you can check the NAV values mutual fund at the company’s website or with any of the online mutual fund service providers. It is calculated using simple nav formula Net Asset Value (NAV) = (Assets – Debts) / (Number of Outstanding units).
No ownership of investment
Just like stocks, mutual funds don’t give any ownership of the investment product for the investor. In mutual funds, investment is made on a portfolio which is a group of securities including equity, debt or hybrid. The purchase and sales of the fund are made by the fund manager and investors invest in this portfolio developed by them.
NAV is the book value
NAV is not something to show the performance of the fund. It is just the book value of the unit. There is nothing like a mutual fund with lower NAV gives more returns and funds with high NAV yield low returns. NAV is the book value at which you buy and sell mutual fund units.
NAV will not fluctuate during the day
NAV will not fluctuate during the day just as the stock value. It remains constant during the whole day the value is calculated at the end of the day after market closing. The value can come down, go up and or can remain the same when compared with previous days’ value.
Rate of return is more important than NAV
It is not a good idea to invest in a mutual fund just looking at the NAV. It can change every day and it doesn’t create any impact on the performance of the fund. You should look at the expected rate of returns for your investment since there are several funds with a varied rate of returns and durations. Compare the leading funds and select the right one that perfectly meets your investment goals.
Study the fund than NAV
You should study the fund than looking at the NAV. You can make use of annual returns statements to know about the growth of the fund. Have a look at the performance of the CEOs and the fund managers in promoting the growth of the fund. You can also make use of reputed online mutual fund platforms to get relevant information about the leading funds and nav formula online.
Now you are well aware of the facts related to NAV. Stop searching for the NAV to take investment decisions since it is not an important factor in determining the performance of funds. You can make use of the listing of leading mutual funds provided by reputed online platforms to take the right investment decision.