NAV is updated daily based on the closing market prices of the securities in the fund’s portfolio. It helps investors understand the current value of their holdings and serves as the price at which units are bought or sold. However, a common misconception is that a lower NAV means a cheaper or better fund. In reality, NAV only reflects the fund’s size and not its performance potential.
Now, let’s connect this with YTD (Year-to-Date) in mutual funds. YTD performance shows how much a fund has gained or lost since the beginning of the calendar year. While NAV tells you the current price per unit, YTD gives you a snapshot of the fund’s recent performance. For instance, if a fund’s NAV was ₹50 on January 1 and is ₹55 today, its YTD return is 10%. This metric is useful for tracking short-term trends, but it shouldn’t be the sole basis for investment decisions.
Why NAV and YTD matter together:
- NAV helps you calculate the value of your investment.
- YTD shows recent performance, aiding in comparison across funds.
In short, Net Asset Value (NAV) is a fundamental concept for mutual fund investors, while YTD returns provide context on performance. Understanding both can help you make informed decisions and align your investments with long-term goals.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.