Mutual Fund Nav

Mutual Fund Investments are subjected to Market risks, please read the offer document before investing. This message is generally splashed on the screen after a commercial advertisement or printed in small letters beneath a banner advertisement. To put it in Laymans words, funds vary and fluctuate with market conditions. If the market is on an incline then the value of the fund soars high, where as if the market is on a decline the value of the same fund dips considerably. Hence diversification or Asset Allocation is important. Say if you invest in three assets/ commodities at a time & you loose out on your dividends from the first investment you would still have the other two Assets to gain back your dividends and in the process balance your profits. It is here that the concept of Mutual Fund Nav (Net Asset Value) comes to play.

On technical or pure professional terms Mutual Fund NAVs are defined as the value of a Mutual Fund Investment, which is usually determined by computing the share of the Mutual Fund at the close of the Financial Market. It is also termed as Bid Price, NAV/Share, NAV/ Unit. The total price value of a NAV is determined by the summing up the total number of Assets in the fund, minus the liabilities, divided by number if shares outstanding. In terms of figures, the calculation it can be represented as:


NAV = [A+B-C] / D,

Where A is the market value of security in the fund,
B is the market value of all other existing assets,
C are the liabilities
D is the number of Shares or Units.

The final value of the NAV is presented on a daily basis at the close of the Financial Market and the complete value at the end of the tenure. It is suggested that an investor re-groups his assets when his financial goals are met. If he still intends to carry on he should think of another goal and continue with the normal procedure. Even though Mutual Fund Investments are risky they are invested on a long term basis for large capital growths and gain. Hence getting your investment right in order to get good NAVs is important.

By: Ryan Crown

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Investment Planner and Financial Advisor for Franklin Templeton India. To read about Mutual Fund NAV and Asset Allocation in detail click www.franklintempletonindia.com/GeneralAccess/Nav/gac_getmore.asp>here and www.franklintempletonindia.com/GeneralAccess/LearningCenter/assetallocation.asp>here