| Definition |
The per-share value of a mutual fund or ETF calculated by dividing total assets minus liabilities by number of shares outstanding. |
The actual price at which a security, mutual fund, or ETF is bought or sold in the market. |
| Calculation Frequency |
Calculated once daily, usually at market close. |
Fluctuates continuously during trading hours based on supply and demand. |
| Applicability |
Primarily applies to mutual funds and ETFs. |
Applies to all tradable securities including stocks, ETFs, and closed-end funds. |
| Basis of Valuation |
Based on the underlying assets’ market value minus liabilities. |
Determined by buyers and sellers in the market through trading. |
| Influencing Factors |
Changes with the value of the fund’s holdings and expenses. |
Influenced by investor sentiment, supply-demand, market conditions, and news. |
| Trading |
Mutual funds transact at NAV at the end of the day; ETFs trade at market price intraday. |
Traded continuously throughout the trading day. |
| Premium/Discount |
NAV is the baseline value; mutual funds usually do not trade at a premium or discount. |
Market price can be above (premium) or below (discount) NAV, especially for ETFs and closed-end funds. |
| Price Transparency |
Transparent as NAV is published daily. |
Prices vary constantly and are visible in real-time to market participants. |
| Cost Implications |
Investors buy/sell at NAV for mutual funds, avoiding bid-ask spreads. |
Investors pay bid-ask spreads and possible premiums/discounts when trading ETFs or stocks. |
| Use Case |
Used to determine the value of a mutual fund’s shares for purchase/redemption. |
Used to buy or sell shares in the market at prevailing prices. |
| Volatility |
Relatively stable; changes based on underlying assets’ market value. |
Can be more volatile due to market demand and supply dynamics. |
| Examples |
Mutual fund NAV reported as ₹100 per unit at day end. |
ETF shares trading at ₹102 or ₹98 during market hours. |
| Impact of Market Sentiment |
Not directly affected by market sentiment, only underlying asset prices. |
Strongly influenced by investor sentiment and market trends. |
| Investor Consideration |
Important for mutual fund investors to understand true asset value. |
Important for traders and investors to know current trade prices. |
| Regulation |
NAV calculation follows regulatory guidelines and accounting standards. |
Market price determined by market forces, regulated by exchange rules. |
| Summary |
NAV represents the intrinsic per-unit value of a fund’s assets. |
Market price is the real-time trading price that may deviate from NAV. |
NAV vs Market Price