Is the NAV of a mutual fund transparent? Can the fund manager manipulate it?
The calculation of a mutual fund’s NAV is not transparent. However, the NAV calculation norms stipulated by the regulator are so stringent that if you have the full portfolio of a fund, it is very likely that you will be able to closely estimate the NAV of a fund.
There is discretion possible in fixed income funds, but that is allowed primarily because the underlying investments are not liquid, as is the case in equity funds. Since fixed income is not actively traded in India, there is a formula that governs their price. Hence, fixed income fund managers are allowed discretion of a nominal kind. Fund companies also declare the price at which bonds are traded on a day-to-day basis so that investors can compare it if they wish to do so. So, in that sense, even though it is not transparent, you can closely estimate the NAV if you have the portfolio.