Reader Q: How is NAV Calculated For Purchases?

Reader Anon asks:

Hi Deepak,
Could you plz explain if some one newly buying to a fund will affect the NAV? or is it like.... today fund came up with the NAV of the scheme and if I apply for 10000 Rs, they give me units say today's NAV/10000 or is it like (Today's NAV calculated including my 10000)/ 10000 as the NAV of today and I allot the units!

Lets take an example. A fund has Rs. 100,000 as its total assets under management (AUM) and, let's say, 5,000 units.

The NAV per unit is Rs. 100,000/5,000 = Rs. 20.

You invest today and you get allocated 500 units at Rs. 20.

Now the total AUM is 110,000 and they have 5,500 units.

If you divide it the NAV will still be Rs. 20 per unit after your investment.

Effectively it is like this

NAV per unit = (Assets under management / Current No. of units). This NAV is used for new purchases or sales today.