Net Asset Value (NAV) is the price per unit of a mutual fund. It represents the fund's total asset value minus liabilities, divided by the total number of outstanding units.
**Formula**: NAV = (Total Assets - Total Liabilities) / Total Units Outstanding
**How NAV affects SIP**: When you invest ₹5,000 in a SIP and the NAV is ₹50, you receive 100 units (₹5,000 ÷ ₹50). Next month if NAV is ₹45 (lower), you receive 111.11 units. This is rupee cost averaging in action.
**NAV vs stock price**: Unlike stocks, a high or low NAV doesn't indicate whether a fund is "cheap" or "expensive." A fund with NAV ₹10 and one with NAV ₹1,000 could both be at the same relative valuation. What matters is the fund's portfolio and performance track record.
**NAV calculation timing**: NAV is calculated once per trading day after market close. SIP orders placed before 3 PM typically get that day's NAV; orders after 3 PM get the next business day's NAV.
**Direct vs Regular plan NAV**: Direct plans have a higher NAV than regular plans of the same fund — because they have lower expense ratios, meaning more of the fund's returns are reflected in the NAV.