AIFLedger · by CorpZo · Fund Admin

AIF NAV computation rules 2026

Net Asset Value (NAV) is the single most important number a fund administrator produces. For Indian AIFs, computation rules differ meaningfully across Category I, II and III — and the mechanics have tightened over the last few years as SEBI has pushed for independent valuation and class-wise reporting. Here is a 2026-current reference for how NAV is built for a SEBI-registered AIF.

The core equation

At the highest level, NAV per unit of a class is:

NAV/unit = (Assets − Liabilities − Accrued fees/carry) ÷ Units outstanding

What makes AIF NAV harder than a plain mutual-fund NAV is that (a) most assets are unlisted or thinly traded, (b) fee and carry mechanics vary per class of units, and (c) some assets may be side-pocketed and struck separately.

Class-wise economics

Modern AIFs issue multiple classes of units to different investor groups — Founder LPs, Anchor LPs, Retail LPs, GP class — each with different management-fee and performance-fee arrangements. The NAV calculation software for AIF must strike NAV per class, not just at fund level:

• Attribute income and expenses to classes on a units-outstanding basis where fair, and on an entitlement basis where fees differ.
• Accrue management fees per class per day (or period) using the class fee rate.
• Reserve for performance fee at the class level using either equalisation or series accounting.

High-water mark and hurdle rate (Category III especially)

For Category III long-short and quant funds, performance fee is typically only charged above the high-water mark (HWM) and, in many cases, above a hurdle rate. Correctly computing NAV requires:

• Tracking HWM per LP or per series of units — never just at fund level.
• Applying the hurdle (e.g. 8% pre-hurdle) before catch-up and carry.
• Crystallising performance fee only at defined events (annual, redemption, or as per PPM).

Side-pockets

When an asset becomes illiquid, defaulted or subject to a regulatory event, SEBI-permitted side-pocketing lets the administrator carve it out of the main NAV. The mechanics matter:

• Existing LPs receive a proportionate pro-rata unit in the side-pocket class.
• The main NAV is struck without the side-pocketed asset.
• New subscribers only get main-class units, never side-pocket units.
• Recovery on the side-pocketed asset is distributed only to existing side-pocket unit-holders.

NAV cycles

• Category I & II — typically monthly or quarterly NAV, with an annual "audited NAV" that becomes the basis for the year-end investor letter.
• Category III (open-ended long-short) — daily or weekly NAV, with subscription/redemption windows aligned to the strike.
• Category III (close-ended) — monthly NAV is common.

Governance

A well-run fund administrator publishes NAV under maker-checker with trustee-visible sign-off. Immutable audit trail (who calculated, who approved, when, from what inputs) is a non-negotiable expectation from SEBI-registered AIFs. AIFLedger's NAV calculation software for AIF module implements class-wise NAV, HWM per series, side-pocket accounting and dual-approval publish out of the box.

See how AIFLedger strikes NAV for your fund →