Units
The divisions of a mutual fund scheme that represent an investor's proportional ownership of the pool.
Formula
Units Allotted = Amount Invested / Applicable NAV
Unit
shares
In depth
Units are allotted in fractions, so any amount can be invested without rounding — unlike shares, where a whole number must be bought. The number of units held never changes on its own; only the NAV moves, which is why a falling value is a falling NAV rather than lost units. An IDCW payout reduces the NAV by the amount distributed while leaving the unit count unchanged, which is the mechanism that makes such a payout not income in any economic sense. Units are redeemed back to the fund rather than sold to another investor, which is what distinguishes an open-ended fund from an ETF.
Worked example
₹25,000 at a NAV of ₹124.50 allots 25,000 / 124.50 = 200.803 units. After a ₹6 per unit IDCW payout, the investor still holds 200.803 units and the NAV falls to ₹118.50 — the money moved, it was not created.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Units” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.