Factors Affecting NAV

Mutual funds consist of a number of stocks of companies. When any one of the companies declare dividends or the stock goes for a split, does that get factored in the NAV of that fund? If so, how would I as an investor in a fund know that?
—Sudhakar

All corporate actions get reflected in that day's NAV. So, the dividend from a company whose stock is in the portfolio gets factored in the NAV. Similarly, the change in daily price, periodic dividend, bonus, rights, splits or the impact of a merger or a demerger is reflected in the NAV the very day it gets into effect or is actualised.

Fund companies do not report on the events that occur in their portfolio stocks. In our opinion too, a mutual fund investor should not try to find out. The whole idea of a mutual fund is to entrust your money to a professional fund manager.

However, funds disclose their portfolios every month and for your interest you can find all company events/corporate actions on the Bombay Stock Exchange (BSE) or National Stock Exchange (NSE) websites.

This article was originally published on July 31, 2008.