Live NAV of Mutual Funds: Everything You Need to Know
If you are planning to invest in mutual funds, one of the essential things you need to know is the Net Asset Value or NAV. NAV is the price per share of a mutual fund, which is calculated by dividing the total value of the assets in the fund by the number of outstanding shares. In this blog, we will discuss everything you need to know about live NAV of mutual funds, including its calculation, importance, and how to track it.
What is Live NAV of Mutual Funds?
The live NAV of a mutual fund is the current value of a fund’s assets per share. It is calculated at the end of each trading day and reflects the fund’s net asset value at the close of business that day. The NAV is an essential metric for mutual fund investors because it determines the value of their investments.
How is the NAV of Mutual Funds Calculated?
The calculation of NAV is straightforward. The net asset value of a mutual fund is calculated by subtracting the fund’s liabilities from its assets and dividing the result by the number of outstanding shares. The formula for calculating the NAV of a mutual fund is as follows:
NAV = (Total Assets – Total Liabilities) / Total Outstanding Shares
The total assets of a mutual fund include all the securities and other assets that the fund has invested in, such as stocks, bonds, and other securities. The total liabilities include any expenses and fees that the fund incurs, such as management fees and operating expenses.
Why is the NAV of Mutual Funds Important?
The NAV of a mutual fund is important for several reasons. First, it is the value of your investment in the mutual fund. Therefore, it is essential to know the NAV to determine how your investment is performing.
Second, the NAV is used to calculate the fund’s performance. Mutual fund performance is measured by comparing its NAV with its previous NAV. This comparison gives investors an idea of how well the fund is performing over time.
Third, the NAV of a mutual fund is used to determine the price of the shares of the fund. When you buy or sell shares of a mutual fund, the price is determined by the NAV.
How to Track Live NAV of Mutual Funds?
Tracking the live NAV of mutual funds is easy. Most mutual fund companies provide updates on their NAVs regularly, typically at the end of each trading day. You can check the NAV of your mutual fund investment by visiting the website of the mutual fund company or by using a financial news website or mobile app.
You can also track the NAV of mutual funds through a demat account. A demat account is an electronic account that holds your mutual fund units. It provides you with a consolidated view of your investments, including the NAV of the mutual fund.
Benefits of Tracking Live NAV of Mutual Funds
Tracking the live NAV of mutual funds has several benefits. Some of them are:
- Helps in making investment decisions: The live NAV of mutual funds helps investors make informed investment decisions. By tracking the NAV, investors can monitor the performance of their investments and decide whether to continue holding or sell their units.
- Provides clarity on returns: The NAV of mutual funds provides clarity on the returns earned by the investor. It shows the change in the value of the investment over a period, helping investors understand how their investment has performed.
- Easy to compare: The NAV of mutual funds is an easy metric to compare the performance of different mutual funds. Investors can compare the NAV of different mutual funds to choose the best performing one.
- Reduces risks: Tracking the NAV of mutual funds reduces investment risks. It helps investors identify any negative trends in the NAV and take corrective actions, reducing the risk of loss.
- Helps in tax planning: Investors can use the NAV of mutual funds to plan their tax liabilities. The NAV of mutual funds is used to calculate the capital gains tax, and investors can use it to estimate their tax liability.
How to Choose Mutual Funds Based on NAV?
While choosing mutual funds, investors should not solely rely on the NAV. The NAV of a mutual fund should not be the only criteria for selecting a mutual fund. Other factors that should be considered include:
- Fund Manager: The experience and expertise of the fund manager are critical to the performance of the mutual fund.
- Investment objective: Investors should choose a mutual fund that aligns with their investment objective.
- Performance history: The past performance of the mutual fund is an important factor to consider while selecting a mutual fund.
- Expense ratio: The expense ratio of a mutual fund is the annual fee charged by the mutual fund company. It is essential to choose a mutual fund with a low expense ratio as it can impact the returns earned by the investor.
Conclusion
In conclusion, tracking the live NAV of mutual funds is important for investors to make informed investment decisions. However, investors should not solely rely on the NAV and should consider other factors while selecting a mutual fund. The NAV of mutual funds is an easy metric to track, and investors can do it through the mutual fund company’s website or a financial news website or mobile app. By tracking the NAV of mutual funds, investors can reduce investment risks, plan their tax liabilities, and make better investment decisions.
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Frequently Asked Questions (FAQs)
What is NAV in mutual funds?
NAV or Net Asset Value is the value of a mutual fund’s assets divided by the number of outstanding shares. It represents the price of one unit of the mutual fund.
How is NAV calculated?
The NAV of a mutual fund is calculated by dividing the total value of the fund’s assets minus its liabilities by the number of outstanding shares.
Why is NAV important?
NAV is important because it represents the value of an investor’s investment in a mutual fund. It also helps in determining the fund’s performance and is used to calculate the price of shares.
What is the difference between the NAV and market price of a mutual fund?
NAV is the value of a mutual fund’s assets divided by the number of outstanding shares, while the market price is the current market value of the mutual fund. The market price can be higher or lower than the NAV, depending on the demand for the fund.
How often is the NAV updated?
The NAV of a mutual fund is updated at the end of each trading day.
Can the NAV of a mutual fund go negative?
No, the NAV of a mutual fund cannot go negative. It represents the value of a mutual fund’s assets and cannot be negative.
What factors can affect the NAV of a mutual fund?
The NAV of a mutual fund can be affected by changes in the market value of the fund’s assets, expenses incurred by the fund, and the number of outstanding shares.
Is a higher NAV better?
No, a higher NAV does not necessarily mean a better mutual fund. The NAV is a relative measure, and the performance of a mutual fund should be evaluated over a period.
Can I invest in a mutual fund with a low NAV?
Yes, the NAV of a mutual fund should not be the sole criterion for investing. Other factors like the fund’s investment objective, performance history, and expense ratio should also be considered.
What happens if the NAV of a mutual fund drops?
If the NAV of a mutual fund drops, it indicates a decrease in the value of the fund’s assets. Investors may experience a decline in their investment value. It is essential to evaluate the reasons behind the drop in NAV before making any decisions.
