Determine Your Fund's Value with NAV

Of all the technical jargon that the mutual fund universe throws your way, by far the most important one is the NAV (Net Asset Value). A seemingly innocuous term that changes at the close of every business day, the NAV online is an important barometer of the fund’s growth.

What does the mutual fund NAV mean?

The NAV (Net Asset Value) of the mutual fund scheme is, simply put, the price at which you buy or sell the fund units. However, it is the market value (and not the share value) of the fund after you deduct liabilities from it. Please note that the portfolio comprises all investments, including cash.

Knowing the latest NAV of mutual funds is important, since it indicates the book or net book value of the fund. You can use this data to track the scheme’s overall daily performance, and also tap key moments in the fund’s cycle to make a better decision on buying or redemption. Besides, though the NAVs keep changing daily, the fund house maintains a historic record of the NAVs on the scheme, so that you can tap how the fund has been performing ever since inception.

The NAV: An important benchmark

So why should you be cognisant of the latest NAV on mutual fund schemes? Consider how knowing the NAV helps:

* It indicates the value of the securities you own. The NAVs are the first indicators of whether your portfolio of securities is in a healthy state of growth or not. They help you tap the fund performance and make strategic decisions based on the values you glean from daily monitoring. If necessary, you and the fund manager can effect necessary changes to steer the fund in a better direction.

* It helps you buy or sell at the right time. The daily business cycle can keep the fund in a state of flux, with market trends further adding to the mix. However, when you study the latest NAV of mutual fund schemes that you own, you get a clear snapshot of the state of the markets and your investments in relation to the same. The NAV is a simple indication of the fund growth; higher NAVs indicate higher growth. Thus, you are able to buy or redeem the fund at the right time.

* It helps to ascertain the fund’s performance. Every fund house will have suitable MF schemes that might seem to be just the solution you have been looking for. But how can you select the right one? This is where the NAV comes in: studying the NAV online history since fund inception gives you an accurate depiction of the fund’s performance since inception. Generally, funds with a stable growth rate and equal or steadily higher annual returns are good options to try.

About This Author

Shaheen Shaikh http://www.adrclinic.co.uk Joined: April 29th, 2018