Mutual funds are among the most popular investment choices in India, offering the potential for long-term growth, diversification, and professional management. Yet, many investors struggle with one essential part of mutual fund investing — tracking the net asset value (NAV) and using it to make informed decisions. Whether you are investing in equity funds, hybrid funds, or tax-saving instruments like ELSS mutual funds, understanding the role of NAV can help you manage your portfolio more wisely and align it with your financial goals.
This article will explain what NAV is, how to monitor it, and how it can support smarter investment decisions.
What is NAV?
The NAV of a mutual fund represents the per-unit value of the fund’s assets. Simply put, it is calculated as:
NAV = (Total Assets – Total Liabilities) ÷ Number of Units Outstanding
For example, if a mutual fund has Rs. 100 crore in assets, Rs. 5 crore in liabilities, and 10 crore units outstanding, the NAV would be Rs. 9.50 per unit.
NAV is calculated at the end of every trading day and reflects the fair value of each unit. When you invest in a mutual fund, you buy units at that day’s NAV. Likewise, when you redeem, you get the redemption value based on that day’s NAV.
Why tracking NAV matters
Many investors mistakenly assume that a lower NAV means a cheaper or better fund. However, NAV itself does not indicate whether a fund is undervalued or poised for higher returns. Instead, NAV is more like the fund’s per-unit price, adjusted daily for market movements.
Tracking NAV over time matters because it helps you:
- Monitor how your mutual fund’s value is changing daily or monthly.
- Calculate gains or losses based on the difference between purchase and current NAV.
- Understand the impact of market fluctuations on your investment value.
- Time withdrawals or redemptions if you need funds at a favourable moment.
NAV tracking becomes even more relevant when investing in tax-saving products like ELSS mutual funds, which come with a lock-in period but can still be tracked for performance comparisons.
Tracking NAV for ELSS mutual funds
ELSS mutual funds (Equity Linked Savings Schemes) are popular tax-saving instruments under Section 80C of the Income Tax Act. They come with a mandatory three-year lock-in period, which means you cannot redeem your investment before three years from the date of purchase.
Even though you cannot withdraw early, tracking NAV during the lock-in period is still useful. It allows you to:
- Monitor how your investment is growing over time.
- Compare the fund’s Net Asset Value movement with its category peers or benchmark index.
- Decide whether to stay invested beyond the lock-in period or switch to another fund.
For instance, if your ELSS fund has consistently underperformed its peers over the three-year period, you may want to redeem and reinvest elsewhere once the lock-in ends.
Tools for tracking NAV
You can track NAVs easily using several sources:
- The mutual fund house’s official website, where daily NAV updates are published.
- Financial news websites and investment portals, which provide NAV data, historical charts, and peer comparisons.
- Mobile investment apps, where you can set up watchlists, alerts, and regular updates on your invested funds’ NAVs.
- Fund fact sheets and monthly reports, which provide NAV along with performance data and portfolio details.
Consistent monitoring, ideally once a month or quarter, can help you stay informed without getting distracted by daily market noise.
Making smarter mutual fund decisions
To make the most of your NAV tracking, follow these best practices:
- Avoid overreacting to daily changes: Mutual fund NAVs fluctuate daily, but long-term investing focuses on trends over years, not days or weeks.
- Compare performance, not just NAV: Use NAV alongside historical return data, risk ratios, and benchmark comparisons to evaluate if your fund is performing well.
- Rebalance based on goals: If you see that one fund (or asset class) has significantly outperformed or underperformed, consider rebalancing your portfolio to align with your financial goals.
- Assess post-lock-in for ELSS: Once the three-year lock-in ends for ELSS mutual funds, assess whether the fund still aligns with your objectives or if switching is warranted.
- Factor in costs and taxes: Remember that redemptions are subject to capital gains tax — so evaluate the net returns, not just the NAV change.
Final Thoughts
Tracking the NAV of your mutual funds, including ELSS mutual funds, is a valuable habit that helps you stay connected to your investments, understand their performance, and make smarter, goal-aligned decisions. However, remember that NAV is only one piece of the puzzle — combining it with a broader understanding of fund performance, risk, and cost ensures you are making well-rounded choices.
With disciplined tracking, periodic reviews, and a focus on long-term objectives, you can use NAV insights to strengthen your mutual fund investing journey and stay on track toward your financial goals.
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