In simple terms, net asset value or NAV is the market value of the securities held by a particular mutual fund scheme. NAV is the market value per unit of all the securities that a particular fund holds. The NAV of the scheme shows its performance.
Mutual funds invest money collected from investors into the securities markets. Since the market value of securities changes every day, the NAV of a scheme also varies on a day-to-day basis. It is mandatory for mutual funds to disclose its NAVs regularly.
The NAV per unit is the total market value of securities of a scheme minus any liabilities (or expenses), this is then divided by the total number of units of the scheme on any particular date. For example, if the total market value of securities of a mutual fund scheme is Rs. 210 lakh, its liabilities are Rs. 10 lakh, and the mutual fund has issued 10 lakh units to investors, its NAV per unit will be Rs. 20 ie ; Rs 210 lakh minus Rs 10 lakh divided by 10 lakh units.