Calculation of NAV, Fact Sheet Analysis

Calculation of NAV (Net Asset Value)

• Definition: NAV represents the per-unit market value of a mutual fund scheme's portfolio. It is the price at which investors buy or redeem units after the NFO period.

• Formula for NAV:

  NAV = (Total Assets - Total Liabilities) / Number of Outstanding Units
  

  Where:

  • Total Assets: Include the market value of all investments (stocks, bonds, cash, etc.), receivables, and accrued income.
  • Total Liabilities: Include expenses payable, accrued expenses, and other liabilities.
  • Number of Outstanding Units: The total number of units issued to investors that are currently outstanding.

• Example Calculation :

  • Value of Stocks: ₹ 230 cr
  • Value of Money Market Instruments: ₹ 5 cr
  • Dividend accrued but not received: ₹ 2.39 cr
  • Amount Payable on purchase of shares: ₹ 7.5 cr
  • Amount Receivable on sale of shares: ₹ 2.34 cr
  • Fees Payable: ₹ 0.41 cr
  • No. of O/s Units (Outstanding Units): 2.65 cr

  Calculation Steps:

  1. Total Assets: Value of Stocks + Value of Money Market Instruments + Dividend Accrued + Amount Receivable on sale of shares = 230 + 5 + 2.39 + 2.34 = ₹ 239.73 cr
  2. Total Liabilities: Amount Payable on purchase of shares + Fees Payable = 7.5 + 0.41 = ₹ 7.91 cr
  3. Net Assets (Total Assets - Total Liabilities): 239.73 - 7.91 = ₹ 231.82 cr
  4. NAV: Net Assets / Number of Outstanding Units = 231.82 cr / 2.65 cr (Units are in crores as per problem context, so we can treat 2.65 cr as just 2.65 for unit calculation as units are also in crores) = 87.48 (approx.)

Fact Sheet Analysis

Mutual Fund Fact Sheet Analysis:

• What is a Fact Sheet? A fact sheet is a concise document, usually published monthly or quarterly by mutual fund houses, summarizing key information about a particular mutual fund scheme. It is a valuable tool for investors to understand and monitor their investments.
• Key Components of a Fact Sheet:
  • Scheme Details:
    • Scheme Name and Category
    • Investment Objective
    • Benchmark Index
    • Fund Manager Name
  • Portfolio Composition:
    • Asset Allocation (e.g., Equity %, Debt %, Cash %)
    • Top Holdings (Top 10 or Top 5 holdings in equity or debt)
    • Sector Allocation (for equity funds)
    • Credit Profile (for debt funds)
    • Average Maturity/Duration (for debt funds)
  • Performance:
    • Scheme Returns (Absolute and Annualized) for various periods (1-year, 3-year, 5-year, Since Inception)
    • Benchmark Returns for comparison
    • Expense Ratio (TER)
    • Risk Ratios (Standard Deviation, Sharpe Ratio, Beta)
  • Other Information:
    • Minimum Investment Amounts (Lumpsum & SIP)
    • Entry/Exit Load Information
    • Fund Manager Commentary/Outlook
    • AUM (Assets Under Management)
    • NAV Trend (Historical NAV movement)
• How to Analyze a Fact Sheet:
  • Understand the Scheme Objective: Ensure the scheme objective aligns with your investment goals.
  • Assess Portfolio Composition: Check if the asset allocation and portfolio holdings are in line with the scheme's objective and your risk appetite.
  • Evaluate Performance: Compare the scheme's performance against its benchmark and peers over various timeframes. Look at risk-adjusted returns.
  • Check Expense Ratio: Consider the TER and compare it with similar funds.
  • Review Fund Manager Commentary: Get insights into the fund manager's strategy and market outlook.
  • Monitor Regularly: Track fact sheets periodically to stay updated on your fund's performance and portfolio changes.