The NAV return is the change in the net asset value of a Mutual Fund over a given time period. The NAV return of a fund is one measure of return and can be different than the Total Return and the Market return. The NAV return is calculated based on the daily NAV of the fund reported after the stock market’s close each trading day.
The NAV is a basic calculation performed by the mutual fund’s accountants. It represents the total assets minus total liabilities divided by outstanding shares. The value changes daily with the fluctuation of assets based on market value.
The NAV return is a transparent Accounting measure that reports the actual assets in the fund at the end of the day. Therefore, dividends, interest and Capital gains distributions paid out to shareholders would not be included in the total assets unless they were reinvested.
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NAV is calculated at the end of every market day, after taking into account the closing market prices of the securities in its portfolio. When selecting a mutual fund for investments, remember that daily changes in NAV don't matter. It is best to look at the annualised / CAGR return of a fund over different time frames to estimate the performance of the fund.