The net asset value of the fund is the cumulative market value of the assets fund net of its liabilities. To put into other words, if the fund is dissolved or liquidated, by selling off all the assets in the fund, this is the amount that the shareholders would collectively own. This gives rise to the concept of net asset value per unit, which is the value, represented by the ownership of one unit in the fund. It is calculated simply by dividing the net asset value of the fund by the number of units. Though, most people refer loosely to the NAV per unit as NAV, ignoring the "per unit". We also abide by the same convention.
The most significant part of the calculation is the valuation of the assets owned by the fund. Once it is calculated, the NAV is simply the net value of assets divided by the number of units outstanding. The detailed methodology for the calculation of the asset value is given below.
Asset value is equal to
Sum of market value of shares/debentures
+ Liquid assets/cash held, if any
+ Dividends/interest accrued
- Amount due on unpaid assets
- Expenses accrued but not paid
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