How Fund Houses Calculate NAV Daily
Fund houses work out a NAV for every business day from that day's valuations, the income accrued and the expenses accrued. This lesson walks through the steps, the disclosure deadlines, and why purchases and redemptions do not by themselves move the NAV.
The daily routine
Most schemes work out a NAV for every business day, meaning a day on which the money markets are open. Liquid and overnight funds do so on every calendar day.
The fund's accounts take the day's valuations: closing prices for traded equity shares, and valuation-agency prices for debt and money market securities. They add income accrued and cash, deduct the day's accrued expenses and other liabilities, and divide the result by the units outstanding.
Accruals: income and expenses
Income is counted as it is earned, not only when the cash arrives. Interest on bonds accrues daily, and dividends on listed shares are recognised when the shares go ex-dividend.
Expenses are treated the same way. Each day's share of the scheme's annual expenses is deducted, so the NAV is net of costs. The NAV is built from current values and accruals only; returns the portfolio is expected to earn in future are never part of it.
Disclosure deadlines
Most schemes must disclose the day's NAV by 11 PM the same day. Fund-of-funds and schemes with 80% or more invested overseas have until 10 AM on the next business day. Schemes holding exchange-traded commodity derivatives have until 9 AM on the next business day.
Why flows do not move the NAV
Purchases create units and redemptions cancel them. A purchase adds assets and units in the same proportion, and a redemption removes them in the same proportion, so the flow itself does not change the NAV; any exit load is credited back to the scheme, net of GST, and adds a little to it.
What moves the NAV from one day to the next is the change in the value of the holdings, together with the income and expenses accrued.
Rules at a glance
A purchase leaves the NAV where it was (illustrative)
Assume a scheme's NAV is ₹50.00 and a purchase of ₹2,00,000 is accepted at that NAV. Stamp duty at 0.005% is ₹10, so (₹2,00,000 − ₹10) ÷ ₹50.00 = 3,999.80 units are allotted.
The scheme's assets rise by ₹1,99,990 and its units by 3,999.80. The new money is worth ₹1,99,990 ÷ 3,999.80 = ₹50.00 a unit, exactly the NAV, so existing investors' NAV is unchanged.
One day's NAV, step by step (assumed figures)
- Assume that at yesterday's close a scheme had 10 crore units and net assets of ₹250.00 crore, an NAV of ₹25.00.
- Today's figures: securities at today's valuations ₹247.45 crore; income accrued to date ₹1.06 crore; cash and bank balances ₹5.00 crore. Total assets = ₹247.45 crore + ₹1.06 crore + ₹5.00 crore = ₹253.51 crore.
- Liabilities, including expenses accrued up to today, are ₹1.01 crore. Net assets = ₹253.51 crore − ₹1.01 crore = ₹252.50 crore.
- Units outstanding are 10 crore. NAV = ₹252.50 crore ÷ 10 crore = ₹25.25.
- Change over the day = (₹25.25 − ₹25.00) ÷ ₹25.00 = 1.00%.
Result. Today's NAV is ₹25.25, up 1.00% from ₹25.00. It rests only on today's prices, the income accrued and the expenses accrued; no expected return is added.
Key points
- NAV is worked out for every business day, a day on which the money markets are open; liquid and overnight funds do so every calendar day.
- Most schemes disclose NAV by 11 PM the same day.
- Fund-of-funds and schemes with 80% or more overseas disclose by 10 AM the next business day; schemes holding exchange-traded commodity derivatives by 9 AM.
- Interest accrues daily, dividends on listed shares are recognised when the shares go ex-dividend, and accrued expenses are deducted every day.
- Purchases and redemptions change assets and units together, so they do not by themselves change the NAV.
- Expected future returns are never part of the NAV.
Common misunderstandings
- NAV is not a live price: a scheme has one NAV for each business day, worked out from that day's valuations.
- New money does not push the NAV up and redemptions do not push it down: assets and units move together.
- Not every scheme discloses by 11 PM: fund-of-funds and schemes with 80% or more overseas have until 10 AM, and schemes holding exchange-traded commodity derivatives until 9 AM, on the next business day.
- NAV is not a forecast: it shows what the portfolio is worth today.
Questions people ask
What is a business day for NAV purposes?
A day on which the money markets are open. Liquid and overnight funds work out a NAV on every calendar day.
When does income enter the NAV?
As it accrues. Interest on bonds accrues daily, and dividends on listed shares are recognised when the shares go ex-dividend.
Does the NAV change when a new investor subscribes?
No. A purchase adds assets and units in the same proportion, so the NAV for existing investors remains unchanged.
What this lesson relies on
- SEBI Master Circular for Mutual Funds (20 March 2026) — Chapters 9 and 10, on NAV, valuation and pricing of units
- SEBI (Mutual Funds) Regulations, 2026 — accounting policies for scheme accounts (recognition of income)
- Indian Stamp Act, 1899 — stamp duty on mutual fund purchases (from 1 July 2020)
This lesson was reviewed independently against these sources on 8 October 2026. Rules change: check the current regulation, scheme document or policy wording before relying on any figure. This is education, not advice.