is a mutual fund with a low NAV cheaper

No — NAV level reflects how long a fund has existed and how much it has grown, and nothing else. ₹10,000 buys the same slice of the same portfolio whether the NAV is ₹12 or ₹450; you simply receive more units at the lower NAV and fewer at the higher one. It is the identical error to judging a stock by its share price instead of its market capitalisation.

what is the cut-off time for mutual fund NAV

3:00 pm for most schemes and 1:30 pm for liquid and overnight funds. The binding condition is realisation of funds at the fund house, not when you pressed the button — an order placed at 2:50 pm whose money reaches the AMC the next morning gets the next day’s NAV. Anything after cut-off moves to the next business day.

difference between direct and regular plan in mutual fund

A direct plan and a regular plan hold identical portfolios and the same manager, but the regular plan pays a trail commission to a distributor out of the fund’s assets — typically 0.5–1.0% a year. That gap compounds for the entire holding period, and over twenty years it can remove roughly an eighth of the final corpus. Check your holdings for the word “Regular”, since many investors are in one without ever having chosen it.

the annual charge deducted from a fund’s assets before NAV is declared is known as

The expense ratio. It is charged every year, in good years and bad, whether or not the fund beats anything, and because it is deducted before the NAV you see, it never shows up as a line on your statement. That invisibility is precisely why it is worth checking before you invest rather than afterwards.

How a mutual fund actually works

Most Indian investors own mutual funds before they own a single share, and almost none can explain what happens between pressing "invest" and owning units. The mechanics matter, because two of them — the plan you choose and the expense ratio — decide a large part of your final outcome.

NAV, and why it is not a price

NAV is the fund's total holdings minus its liabilities, divided by units outstanding. It is calculated once a day after markets close — so unlike a share, you never know the exact price at which you are transacting when you place the order.

NAV = (market value of holdings − liabilities) ÷ units outstanding

market value: every security the fund holds, at that day’s closing price
liabilities: fees payable and other dues
units outstanding: total units held by all investors

Example: A fund holding ₹1,000 crore with ₹2 crore of liabilities and 40 crore units has a NAV of ₹24.95.

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The same confusion, in its stock form: a high price tells you nothing about whether something is expensive.

Cut-off times

Which day's NAV you receive depends on when the money actually reaches the fund house — not when you pressed the button.

Fund type	Cut-off	NAV you get
Liquid / overnight	1:30 pm	Previous day’s NAV, if funds are realised
All other funds	3:00 pm	Same day, if funds are realised by then
After cut-off	—	Next business day

Direct versus regular — the largest decision on this page

Every scheme has two plans holding identical portfolios. A regular plan pays a trail commission to a distributor out of the fund's assets; a direct plan does not. The difference is typically 0.5–1.0% a year, and it compounds against you for the entire holding period.

Worked example

The same fund, two plans, twenty years

₹10,000 monthly SIP, 12% gross return

Direct planCorpus ≈ ₹92 lakhNet ~11.5% after 0.5% expense

Regular planCorpus ≈ ₹80 lakhNet ~10.5% after 1.5% expense

DifferenceFor an identical portfolio, identical manager, identical everything≈ ₹12 lakh

What was bought with itPaid every year, whether or not any advice was givenA distributor’s trail commission

One percentage point sounds trivial and is not. Over twenty years it removes roughly an eighth of the corpus. If you receive genuine ongoing advice, that fee may be worth paying — but you should know you are paying it.

Exit loads and taxation

What it costs to leave

1
Exit load
Typically 1% if redeemed within a year for equity funds; usually nil for liquid funds after a few days. Charged by the fund, deducted from your redemption.
2
Capital gains tax
Equity funds are taxed at short-term rates within a year and long-term rates beyond, with an annual exemption. Debt funds are taxed at slab rates regardless of holding period.
3
Each SIP instalment is its own purchase
The most commonly missed rule. Redeeming a three-year SIP means the last twelve instalments are still short-term, each with its own holding period and cost.
4
Switching is a sale
Moving between schemes — even within the same fund house — is a redemption plus a purchase, with tax and exit load consequences.

Check yourself

Fund A has a NAV of ₹15 and Fund B a NAV of ₹450, with identical portfolios and expense ratios. You invest ₹30,000. Which is better value?

Simple bhasha mein

Doodh ka bhaav, dabbe ka size nahi

Ek fund ka NAV ₹15 hai, doosre ka ₹450 — log sochte hain pehla "sasta" hai. Galat. ₹30,000 dono mein daalo toh same portfolio ka utna hi hissa milega, bas units ki ginti alag hogi. Doodh ₹60 litre hai — aap adha litre lo ya do litre, bhaav wahi rehta hai.

What to remember

NAV is computed once daily after close; you never know your exact price when ordering.
A low NAV is not cheap — it reflects the fund’s age, not its value.
Which NAV you get depends on when funds are realised, not when you clicked.
Direct plans hold identical portfolios and cost 0.5–1% a year less; over twenty years that is around an eighth of the corpus.
Every SIP instalment has its own holding period, and switching schemes is a taxable sale.

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Common questions

Short, direct answers to what people ask about this topic.

NAV meaning in mutual fund: NAV, or net asset value, is a scheme’s total holdings minus its liabilities, divided by the units outstanding. It is calculated once a day after markets close, so unlike a share you never know the exact price at which you are transacting when you place the order. A fund holding ₹1,000 crore with ₹2 crore of liabilities and 40 crore units has an NAV of ₹24.95.
is a mutual fund with a low NAV cheaper: No — NAV level reflects how long a fund has existed and how much it has grown, and nothing else. ₹10,000 buys the same slice of the same portfolio whether the NAV is ₹12 or ₹450; you simply receive more units at the lower NAV and fewer at the higher one. It is the identical error to judging a stock by its share price instead of its market capitalisation.
what is the cut-off time for mutual fund NAV: 3:00 pm for most schemes and 1:30 pm for liquid and overnight funds. The binding condition is realisation of funds at the fund house, not when you pressed the button — an order placed at 2:50 pm whose money reaches the AMC the next morning gets the next day’s NAV. Anything after cut-off moves to the next business day.
difference between direct and regular plan in mutual fund: A direct plan and a regular plan hold identical portfolios and the same manager, but the regular plan pays a trail commission to a distributor out of the fund’s assets — typically 0.5–1.0% a year. That gap compounds for the entire holding period, and over twenty years it can remove roughly an eighth of the final corpus. Check your holdings for the word “Regular”, since many investors are in one without ever having chosen it.
the annual charge deducted from a fund’s assets before NAV is declared is known as: The expense ratio. It is charged every year, in good years and bad, whether or not the fund beats anything, and because it is deducted before the NAV you see, it never shows up as a line on your statement. That invisibility is precisely why it is worth checking before you invest rather than afterwards.