Now we discuss a very important aspect of mutual funds. The net asset value or more commonly known as nav nav. net asset value is the value at which our units of mutual fund are bought or sold. So, in a way we can say that the net asset value or nav is the price of a mutual fund. Every AMC declares a nav of each of the mutual funds under its belt at the end of each trading date. As we discuss further it will become clear why declaring NAB is only possible at the end of each trading day.

Let us look at the formula for calculating net asset value. net asset value is calculated as current fund value minus current liabilities divided by total number of shares. We will see how to calculate the current Find value and also we will take a look at how liabilities could be factored in number of shares is what is what is subscribed to by the investors in a particular mutual fund. Now let's take a look at how current fund value is calculated. This method is the same for any kind of mutual fund, whether it's a equity fund or a debt fund or a hybrid fund, that is a balanced fund etc. Suppose a mutual fund has the following portfolio as shown here, so it has HDFC Bank PCs, reliance waters electronics and further it has 50,000 shares in HDFC at 25,000 in TCS and rest as shown here.

Let us share price of the stocks v as shown at the time of calculation of the nav, these are taken on the 15th of March 2019. So, now we can calculate the value as number of shares into the share price. The current one value is the sum of all the values of individual stocks, that is in this case it is 280 6.85 millions suppose, the fund liabilities are zero and the number of shares is 10 millions, in this case the NAF looks out to be rupees 28.685. So, we see that the share price is very important factor for calculating the nav. Now, the share price keeps on changing throughout the day. So, that is why to calculate nav the share price at the end of the day is considered.

So, that and that is the reason why nav is always Always declared at the end of each trading day. fund liabilities are expenses required for management and operations of the mutual fund. These include typically management fees, trading fees, legal fees, auditors, fees, operational expenses, etc.