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High NAV? Here's what you need to know

The higher the NAV, the higher the performance of the mutual fund. This article explains the significance of the NAV jump.

Investors who are relatively new to the mutual fund universe are often left confused by various jargon that they come across in the investment. However, one term – the NAV – keeps popping up over and over again. What is it, and what is its importance in the overall scheme? This article sheds light on NAV, high and low NAV values, and why your portfolio must be managed efficiently.

What is the NAV?

The NAV (Net Asset Value) of the mutual fund is the base price at which the investor invests in, or sells the units of a particular fund scheme. It is computed using a complex mathematical formula. Basically, the latest NAV is arrived at by computing the cumulative value of all the securities you own, including cash. From this, you must deduct debt and liabilities: the number you are left with is the NAV for the fund.

What causes the NAV to rise?

As explained above, the latest NAV is composite value of all the securities in your portfolio, including cash. It is directly reflective of the value of the securities you own. Hence, when the value of the securities goes up in response to market trends, the NAV also rises correspondingly.

The basic fact you need to know about NAVs, is that if they are on the higher side, it means that the fund value of your portfolio is on the rise as well.

How you can monitor the NAV online

  • The fund house that you purchased the fund(s) from has the entire NAV history for that fund on its website.
  • You can track the NAV history as well as the latest NAV over a period of time, to get an idea of the fund’s performance vis-à-vis the rate of growth.
  • NAV’s online values can be checked from the fund’s inception to the present date, to get a picture of whether the fund is growing as well as expected or not. You can access the fund house website by using the same log-in credentials that were created when you registered for mutual fund investment.
  • However, the NAV is not the only parameter of fund growth. The fund’s growth is also dependent upon whether the mutual fund belongs to the mid-cap or small-cap segment, the business sector it belongs to, and whether the sector is experiencing a lull or a boom for a certain period of time.

Manage the fund responsibly

Several experienced investors are able to monitor the mutual fund investment, primarily by tapping the latest NAVs. Based on the fund’s current performance, they can make a few changes that help them steer the scheme towards better growth in the future.

However, not all investors have the know-how or the experience to carry out fund management by themselves. If you are relatively new to the investments’ world, you can have a fund manager oversee your portfolio and keep it on the right track through timely inputs and reports.

Post Author: Fathiyya Al Shaikh

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