Various Asset Management Companies offer mutual funds through NFO (New Fund Offer). During the NFO (closed period), each fund unit will be at Rs. 10, i.e., NAV = 10 Rs.

Until the mutual fund hits the ground, its NAV is Rs. 10 per unit. For example, if you have invested Rs. 1,00,000 in the new scheme under NFO, you will be allotted 10000 units.

Mutual fund NAVs are calculated this way.

After the scheme is launched, NAV is calculated by using the following formula:

**NAV (Net Asset Value) = ((Fund Total Asset – Fund Total Liabilities)/Number of outstanding shares))**

**Total fund Asset** – Cumulative Value of all shares in the mutual fund.

**Total Liabilities** – Expenses or TER of the scheme.

*Note: The assets are calculated based on the share price at the closing bell.*

So, post the trading hour, the assets will be calculated and subtracted by the expense per day (Percentage from TER).

For example, If the asset value has grown from 1000 (NAV – 100 Rs) crores to 1100 crores. So, the growth for the day is 10%. In this, the fund house deducts TER (let us assume 2% TER).

Daily profit is subtracted from the expense ratio. In the above scenario, the growth is 100 crores. So, 2% of growth is 2 crores.

The amount post TER deduction is 98 crore. So, the current value of an investment will be 1098 crores. Hence, NAV will be 109.8 per mutual fund unit.