Investors often find themselves comparing funds on quick metrics, and NAV vs AUM (Net Asset Value vs Asset Under Management) usually becomes the first checkpoint. It feels simple at the surface. One number shows the fund’s price, the other shows its size.
Yet, the more time you spend studying mutual funds, the clearer it becomes that these two indicators reveal very different things about how a fund works, behaves, and ultimately delivers returns. Many new investors assume that a lower NAV is cheaper or that a higher AUM guarantees stability. Still, the reality tends to unfold differently once you look at how money flows in and out of a scheme and how that shapes the fund manager’s strategy.
Understanding this difference will help you read a fund the way analysts do, with a sharper sense of what actually drives performance beneath the market noise.
What Is AUM in Mutual Fund and Why It Matters?
Before delving deeper into AUM vs NAV, it makes sense to step back and understand what is AUM in a mutual fund. AUM is simply the total value of all the assets a fund manages at a given point.
AUM is closely linked with the performance of the mutual fund. As per the Association of Mutual Funds of India (AMFI), mutual fund AUM India stands at ₹79.8 lakh crore as of 31 October 2025.
As markets rise, the value of the fund’s holdings increases, pushing AUM higher, and vice versa.
Investor inflows and redemptions also influence this number, since every addition or withdrawal changes the total assets the fund manages.
When investors pour money into a scheme during strong performance, the mutual fund AUM India tends to shoot up. During volatile phases, AUM often declines because falling market prices reduce the value of the fund’s holdings, and periods of uncertainty typically trigger higher investor withdrawals.
Many investors assume that a fund with a very high AUM is automatically superior, but the importance of AUM in mutual fund often depends on the category. Large-cap funds generally function smoothly with higher AUM,
while small-cap funds can sometimes struggle if the AUM expands too quickly.
The AUM formula is: add the current market value of everything the fund owns. This can include equities, debt instruments, cash positions, and any other investments.
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What Is NAV in Mutual Fund, and How Does It Work?
To put it simply, what is NAV in mutual fund is the per-unit price of the scheme. To put it simply, it is the share price of the mutual fund scheme.
If AUM captures the fund’s overall size, NAV reflects the value of each unit. It is calculated after adjusting the fund’s total assets for its liabilities.
NAV formula: (Total Assets – Total Liabilities) / Number of Units Outstanding
All mutual fund schemes are required to calculate and disclose their NAV on every business day. This’s because NAV is updated daily, reflecting the daily movement in the market value of the fund’s underlying securities.
You can find this updated NAV on the fund house’s website, the AMFI portal, or any major investment platform that publishes daily NAV data.
Investors often assume a low NAV makes a fund more attractive, but
A scheme with a ₹10 NAV and another with a ₹200 NAV can generate identical returns if their portfolios perform the same, because the NAV level has no impact on how returns are delivered.
Why Investors Should Evaluate AUM and NAV Together
Most investors check NAV almost daily, but AUM often goes unnoticed even though it quietly shapes fund dynamics.
A rising AUM signals investor confidence and strong past performance. Declining AUM often indicates outflows or a correcting market phase. Both are important, but both must be read in context.
For long-term investors, AUM stability can indicate how a fund performed during various market cycles. NAV shows how the fund delivered returns during those cycles. You shouldn’t look at one without considering the other, because doing so gives you only half the picture.
Mutual fund wala will always guide you to track these patterns closely, so that every investment decision is built on clarity rather than guesswork.
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Frequently Asked Questions
01. How much AUM is suitable for mutual fund in India?
Ans: There isn’t a single benchmark because AUM suitability depends on the category. Large-cap funds handle higher AUM comfortably, whereas small-cap funds generally work better with moderate AUM for more nimble execution.
02. What is good AUM for mutual fund?
Ans: A “good” AUM is one that supports the fund’s strategy without causing liquidity or deployment challenges. For equity categories, moderate and stable AUM is usually considered healthier than extremely large or extremely small AUM.
03. Does NAV matter when selecting a mutual fund?
Ans: NAV does not determine future returns. A fund with a high NAV or a low NAV can deliver similar performance if its portfolio behaves similarly. What matters is portfolio quality and consistency.
04. Do funds with higher AUM give better returns?
Ans: Not necessarily. AUM reflects fund size, not performance. Many strong performers manage moderate AUM, especially in categories such as small-cap or mid-cap funds.
05. Is a low NAV suitable for new investors?
Ans: A low NAV only indicates that the fund started at a lower base or has been around for a shorter period. It doesn’t make the fund cheaper or more rewarding. Returns come from portfolio performance, not NAV level.
