Mutual and other Funds

49. Explain the importance of NAV in Mutual Funds.

Ans: Many Mutual Funds use NAV to determine the price for transacting units of the Fund .An investor either buys or sells Mutual Funds typically at the Net Asset Value .According to SEBI guidelines , Mutual Fund companies have to value their portfolio once daily ; and this is the price at which investors must buy and sell the Mutual Fund each day.The exact valuation technique may vary from Fund to Fund.The NAV of a scheme is determined by dividing the net assets of the scheme with the number of outstanding units on the valuation date.