If you invest in a unit trust, you will come across the term NAV regularly. It stands for Net Asset Value, and it is the most important number for understanding how much your investment is worth.
NAV is the price of one unit in a fund. It is calculated by taking the total value of everything the fund owns (all its investments, cash, and other assets), subtracting any liabilities (expenses, fees owed), and dividing by the total number of units held by all investors.
The formula is simple: NAV = (Total Assets minus Total Liabilities) divided by Total Number of Units.
For example, if a fund has total assets worth GHS 10,000,000, liabilities of GHS 200,000, and 1,000,000 units outstanding, the NAV per unit would be GHS 9.80.
NAV changes every business day as the value of the fund’s underlying investments changes. If the bonds and stocks held by the fund increase in value, the NAV goes up. If they decrease, the NAV goes down.
When you buy units, you buy them at the current NAV. When you sell (or redeem) units, you sell them at the current NAV. This is why it is called the unit price.
Your investment return is directly tied to changes in NAV. If you bought 100 units at a NAV of GHS 10.00 each (investing GHS 1,000) and the NAV later rises to GHS 11.50, your investment is now worth GHS 1,150. That is a 15% return.
Some funds also distribute income (dividends or interest earned). This may either be paid out to you or reinvested by buying more units on your behalf. Either way, the total return includes both NAV appreciation and any distributions.
This is a common misconception. A fund with a NAV of GHS 50 is not necessarily better than one with a NAV of GHS 2. The NAV simply reflects the fund’s history and how long it has been operating. What matters is how the NAV changes over time, not its absolute level.
If Fund A has a NAV of GHS 50 and it grew by 12% last year, and Fund B has a NAV of GHS 2 and also grew by 12%, both delivered the same return to their investors. The NAV per unit is just a reference price.
Most fund managers publish NAV updates daily or weekly. You can usually find this information on the fund manager’s website, in newspapers, or through your investment account dashboard. Some fund managers also send regular statements showing your unit balance and current NAV.
While it is good to keep track of your NAV, avoid checking it obsessively. Daily fluctuations are normal and do not reflect the long term trend. Review your investment performance monthly or quarterly and focus on the overall direction rather than day-to-day movements.
Understanding NAV gives you clarity about what you own and how your investment is performing. It removes the mystery and puts you in control of your financial decisions.
