Mark to market

Mark to market means a scheme values everything it holds at the current market price each day, not the price it paid. This daily valuation is what produces a fresh NAV.

What it means in practice

Imagine a fund bought a share at ₹100 and it now trades at ₹120. Marking to market means the fund records that holding at today’s ₹120, not the ₹100 it paid. It does this across every security it owns, every business day, after markets close. Add up all those current values, subtract what the scheme owes, divide by the units, and you get the day’s NAV. So the price of your units always reflects what the holdings are worth now, not some older cost.

Why it matters to you

Mark to market is why your fund value moves daily and honestly. You are never shown a stale or flattering number: a gain shows up only when the market actually values the holdings higher, and a fall shows up straight away too. It also means a fund cannot hide a drop by pointing to the price it originally paid. The flip side is that short-term paper swings are visible, which is normal; what matters is where prices are when you redeem. The idea applies to debt funds too, which is why even “safe” funds can wobble when interest rates move.