How HDFC Mutual Fund NAV Calculation is Done?

NAV is an abbreviation for Net Asset Value. If you would’ve ever overheard a conversation between an advisor and an investor, a discussion about NAV is a sure thing. It is an indication of a fund’s per unit market value. Investors buy and sell securities at the NAV of fund. So, if you are interested in buying HDFC mutual fund units, you will have to do it at the present day NAV of the fund. Similarly, you will have to sell the units at the prevalent HDFC Mutual Fund NAV. Different schemes of HDFC have different NAV. Based on the performance of the fund the NAV keeps on shooting or coming down. Now that we are clear about what NAV is, let’s jump on to how HDFC Mutual Fund NAV calculation is done.

What is the formula for Calculating HDFC Mutual Fund NAV?

I know the thought of complicated maths is terrifying. But this isn’t that complex at all. It is just basic division. Two things are required to calculate the HDFC Mutual Fund NAV   total net assets of and the total number of outstanding shares. To determine the total net assets, HDFC subtracts any liabilities from the fund’s total assets.

NAV = (Total Assets - Liabilities) / Total Number of Outstanding Shares

For instance, if the market value of securities held by the fund is INR 500 lakh and the mutual fund issues 20 lakh units of INR 10 each. Then, HDFC Mutual Fund NAV will be INR 25.

How is HDFC Mutual Fund NAV Relevant to Investors?

This is the price at which investors buy or sell the units of HDFC mutual fund scheme. So obviously, it is highly relevant because it indicates the number of fund units an investor will receive. But some investors often mistake NAV for the share price. They think both work the same way. New investors think that they have got a good deal when they buy fund units at lower NAV. But this doesn’t make sense. It makes sense in the case of stocks as you get a bargain deal there. It is hard to judge whether a fund is expensive or cheap by its NAV; or its performance also. However, if a particular HDFC fund is consistently performing well, then the NAV can be used as an indicator to gauge the fund’s performance.  if you want to judge the return of HDFC mutual fund scheme, do it by the return it has provided over the years rather than judging it by its NAV.

When is HDFC Mutual Fund NAV Calculated?

Calculating the NAV during market hours is impossible as the prices of the stocks held by the mutual funds (underlying stocks) changes from time to time. This is the reason why NAV calculation for all of the HDFC mutual funds is done at the end of the day. End of the day calculation of NAV helps to take into account the closing prices of all the stocks that is being held by HDFC Mutual Fund.

Disclaimer: Mutual Fund Investments are subject to market risks, kindly read all scheme related documents carefully before investing.