How Fund Houses Calculate NAV Daily
Daily NAV calculation is the process by which mutual fund houses determine the per-unit value of each scheme at the end of every business day. The fund accounta...
How Fund Houses Calculate NAV Daily
Daily NAV calculation is the process by which mutual fund houses determine the per-unit value of each scheme at the end of every business day. The fund accountant collects the closing market prices of all securities held, adds accrued income (interest and dividends), includes cash and bank balances, subtracts all accrued expenses and liabilities, and divides the resulting net asset figure by the total outstanding units. SEBI requires AMCs to publish the NAV on their website and the AMFI website by 11:00 PM on every business day. For liquid and overnight funds, the NAV must be published by 11:00 PM as well, but the valuation cut-off rules differ.
The NAV calculation process is like closing the books of a company every single day. Here is what happens inside a fund house between 3:30 PM (market close) and 11:00 PM (NAV publication deadline). Step 1: Market Close & Price Capture. At 3:30 PM, the NSE and BSE close. The fund accounting team captures the closing prices of every equity stock held in the portfolio. For debt securities, the team downloads the day's AMFI/CRISIL valuation matrices. Step 2: Corporate Action Adjustments. Any corporate actions — stock splits, bonus issues, dividends declared, rights issues — are adjusted. If a stock went ex-dividend that day, the dividend income is accrued. Step 3: Income Accrual. Interest accrued on bonds and debentures (calculated daily based on coupon rates) is added. Dividend income from stocks that went ex-dividend is recorded. Step 4: Expense Accrual. The day's share of TER is calculated (annual TER / 365) and deducted. Any other payables — management fees, custodian charges, registrar fees — are accrued. Step 5: Unit Capital Update. New subscriptions received that day (that qualify for the day's NAV based on cut-off timing) create new units. Redemptions processed cancel units. The total outstanding units are updated. Step 6: NAV Computation. Net Assets (Total Assets - Total Liabilities) divided by Updated Outstanding Units = the day's NAV. Step 7: Publication. The NAV is published on the AMC website and AMFI website by 11:00 PM.
A Practical Example
Let us follow the NAV calculation of a hypothetical fund — "Trustner Bluechip Equity Fund" — on a specific business day, say March 12, 2025.
Events on March 12:
• Nifty rises 1.2%, portfolio equity value increases to ₹4,250 crores (not all stocks move equally)
• One stock (HDFC Bank) goes ex-dividend: dividend accrual of ₹2 crores
• New SIP subscriptions received before 3 PM cut-off: ₹15 crores (creating 63.16 lakh new units at today's NAV)
• Daily TER expense: ₹4,300 crores x 1.80% / 365 = ₹0.212 crores
NAV Calculation:
Total Assets = ₹4,250 + ₹80 + ₹5 + ₹2 + ₹15 = ₹4,352 crores
Total Liabilities = ₹0.212 crores (day's TER) + ₹1.5 crores (other accrued expenses) = ₹1.712 crores
Net Assets = ₹4,352 - ₹1.712 = ₹4,350.288 crores
Outstanding Units = 180 crore + 0.6316 crore = 180.6316 crore units
NAV = ₹4,350.288 / 180.6316 = ₹24.08
The fund accountant, Sneha, publishes this NAV on the AMC website by 9:30 PM — well before the 11 PM SEBI deadline.
What Makes This Important
Frequently Asked Questions
NAV computation requires closing prices from exchanges (available after 3:30 PM), AMFI/CRISIL debt valuation matrices (published between 5-7 PM), reconciliation of all subscriptions and redemptions received during the day, and verification by the fund accountant and compliance team. All this takes several hours. SEBI allows until 11:00 PM to ensure accuracy. Most large AMCs publish NAV by 9:00-10:00 PM.
🧠 Quick Quiz
3 questions to check your understanding