NISM-Series-X-A: Investment Adviser (Level 1) · Mutual Funds

How to Calculate NAV of a Mutual Fund

Updated 11 October 2026 · Fact-checked

NAV is the per-unit value of a mutual fund scheme. Compute it as (market value of investments + other assets − liabilities and accrued expenses) ÷ number of units outstanding. Units allotted equal the amount invested (after any load) ÷ applicable NAV. Exit load is deducted from redemption value, not from NAV.

Understand NAV, Pricing and Fund Accounting

A mutual fund pools money from many investors and issues units. Each unit represents a share of the scheme's portfolio. The Net Asset Value (NAV) tells you what one unit is worth on a given day.

NAV is based on the scheme's net assets. Net assets are the market value of all securities held, plus cash, receivables and accrued income, minus liabilities and accrued expenses. Divide this by the units outstanding and you get NAV per unit. Open-ended schemes declare NAV every business day. Expenses are accrued daily and are already reflected in NAV, so you do not see the expense ratio as a separate charge.

When you invest, you buy units at the applicable NAV, which depends on the cut-off time and when the money is available for use. For most schemes, a valid purchase or redemption request received before the cut-off gets that day's NAV; after the cut-off it gets the next business day's NAV. Check the scheme's cut-off rules in your workbook, as liquid and overnight schemes have special conditions tied to realisation of funds.

Units allotted = amount invested ÷ NAV. You can get fractional units, usually up to the decimals the scheme specifies. Redemption value = units × NAV, less any exit load and applicable tax.

SEBI has prohibited entry load for mutual fund schemes since August 2009, so no entry load is charged. Any distributor compensation is paid from the scheme's expenses or separately agreed by the investor under the rules. Exit load is a charge on redemption within a stated period, expressed as a percentage of the NAV at redemption. It is retained by the scheme for the benefit of the remaining unitholders, after permitted deductions. It is not part of the NAV calculation.

Key formulas to remember

Net assets: Net assets = Market value of investments + Cash and receivables + Accrued income − Liabilities − Accrued expenses; Use market value, not cost. Subtract all liabilities and accrued expenses.
NAV per unit: NAV = Net assets ÷ Number of units outstanding; Units outstanding is the number on the valuation date, before new units are allotted.
Units allotted: Units = Amount invested ÷ Applicable NAV; Where a scheme allows entry load, the net amount after load is used. Entry load is not permitted now.
Redemption proceeds: Proceeds = Units × NAV × (1 − Exit load %); Exit load applies on the redemption NAV and only if the redemption falls within the load period.
Exit load amount: Exit load = Units redeemed × NAV × Exit load %; It is charged only on the units that fall within the load period.
Entry load: Entry load = 0; SEBI banned entry load for mutual fund schemes from 1 August 2009.

How to solve NAV, Pricing and Fund Accounting questions

Use this order for any NAV, pricing or load question. It keeps units and rupees from getting mixed up.

1Identify what is asked: NAV, units allotted, redemption value or load amount.
2List the figures given: investments at market value, other assets, liabilities, expenses and units outstanding.
3Compute net assets first. Add assets, then subtract all liabilities and accrued expenses.
4Divide net assets by units outstanding to get NAV. Keep at least four decimals until the end.
5For a purchase, divide the invested amount by the applicable NAV after checking the cut-off time.
6For a redemption, multiply units by NAV, then apply exit load only if the holding period is inside the load period.
7Check that the result is sensible: NAV should be near the stated range and units should fit the amount.

Quickest way: Net assets, divide, then adjust

When to use it: Use when the question gives clean numbers and asks for a single value.

Write net assets in one line: assets minus liabilities.
Divide once by units outstanding.
For loads, multiply by (1 − load %) in one step.
Eliminate options that ignore liabilities or use cost instead of market value.

Common mistakes in NAV, Pricing and Fund Accounting

Using the cost of investments instead of market value
Students treat the portfolio like an accounting ledger.
Fix: NAV always uses current market value of holdings. Ignore purchase cost unless asked about gains.
Forgetting to subtract accrued expenses and liabilities
The question lists them last, so they get skipped.
Fix: Underline every liability and expense in the question and subtract all of them before dividing.
Applying an entry load
Older books and options still mention it.
Fix: Entry load is not permitted for mutual fund schemes since August 2009. Units equal amount ÷ NAV.
Charging exit load on the original investment amount
Students link load to what was paid in.
Fix: Exit load is a percentage of the redemption NAV, so it applies to the redemption value of the units in the load period.
Using the wrong day's NAV
Cut-off time rules are overlooked.
Fix: Check whether the request was received before the cut-off. After cut-off, the next business day's NAV applies, subject to the scheme's fund-realisation conditions.
Thinking the expense ratio is deducted from your redemption
Expenses are visible as a percentage in factsheets.
Fix: Expenses are accrued daily inside NAV. Only exit load and tax are separate deductions on redemption.

Worked examples

Example 1

A scheme holds investments with a market value of ₹520 crore and cash and receivables of ₹30 crore. Its liabilities and accrued expenses total ₹10 crore. It has 40 crore units outstanding. What is the NAV per unit?

Show the solution

Total assets = ₹520 crore + ₹30 crore = ₹550 crore.
Net assets = ₹550 crore − ₹10 crore = ₹540 crore.
NAV = ₹540 crore ÷ 40 crore units = ₹13.50.

Answer: ₹13.50 per unit

Example 2

You invest ₹1,00,000 in a scheme when the applicable NAV is ₹25. After 8 months you redeem all units at NAV ₹30. The exit load is 1% if redeemed within 1 year. How much do you receive, ignoring tax?

Show the solution

Units allotted = ₹1,00,000 ÷ 25 = 4,000 units. No entry load applies.
Redemption value = 4,000 × ₹30 = ₹1,20,000.
Redemption is within 1 year, so exit load applies: 1% of ₹1,20,000 = ₹1,200.
Proceeds = ₹1,20,000 − ₹1,200 = ₹1,18,800.

Answer: ₹1,18,800

Exam tips

Read whether the question gives market value or cost. Use market value for NAV.
Watch for the word 'accrued'. Accrued expenses are liabilities and reduce net assets.
Expect conceptual options on entry load: the correct statement is that it is not permitted.
With 25% negative marking on 2-mark caselet questions, avoid guessing unless you can remove two options.
Calculate exit load on the redemption value, not on the amount originally invested.

Practice questions from Mutual Funds

NAV, Pricing and Fund Accounting in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

NAV, Pricing and Fund Accounting: frequently asked questions

How do you calculate NAV of a mutual fund?

Add the market value of investments and other assets, subtract liabilities and accrued expenses, and divide by units outstanding. The result is the NAV per unit for that day.

What is exit load in mutual funds?

Exit load is a charge deducted when you redeem units within a specified period. It is a percentage of the redemption NAV and is not part of the NAV calculation itself.

Is there an entry load on mutual funds in India?

No. SEBI abolished entry load for mutual fund schemes from 1 August 2009. You buy units at the applicable NAV for the full amount invested.

Does a higher NAV mean a better mutual fund?

No. NAV is just the per-unit value and depends on the launch price and growth since. Compare funds on returns, risk and costs, not on NAV level.