Net asset value
What is Net asset value?
Net asset value is a fund's recognized assets minus liabilities, while per-share NAV divides that net amount by the applicable number of outstanding shares or units. It provides a standardized valuation reference for pooled vehicles, yet remains dependent on asset-pricing policies, accounting estimates, calculation timing, currency, class-level allocations, and complete recognition, valuation, and allocation of all material fund liabilities.
How NAV is calculated
The fund values portfolio securities and other assets under its valuation policy, adds receivables and cash, subtracts liabilities and accrued expenses, then allocates the result among shares or classes. Exchange prices may be used for liquid holdings, while evaluated prices, models, fair-value procedures, or appraisals may be needed when observations are unavailable or stale.
NAV and investor transactions
Traditional mutual fund subscriptions and redemptions generally use the next calculated NAV, adjusted for permitted charges. ETF retail shares trade at market prices that can differ from NAV. Closed-end funds can trade at persistent premiums or discounts because they generally do not redeem ordinary shares daily. NAV frequency, timing, currency, and class allocation must be known before comparison.
Example
A fund owns $105 million securities, $3 million cash, and $2 million receivables, with $5 million liabilities. NAV is $105 million. With 10 million shares, per-share NAV is $10.50. If one illiquid holding is later marked down $5 million, NAV falls by about $0.50 per share before other movements.
How to interpret it
NAV is an accounting valuation, not a forecast, guaranteed liquidation value, or automatically executable secondary-market price. A higher NAV per share does not mean one fund is more expensive than another because share counts are arbitrary. Use percentage total return after distributions for performance. Review stale-price, fair-value, foreign-market-close, derivative, and class-expense policies when precision matters.
Risks and practical checklist
NAV can be uncertain when markets close, assets are illiquid, models rely on judgment, or liabilities are incomplete. Smoothed private valuations can understate volatility. Confirm valuation date, time, currency, accounting basis, share class, accrued income, fees, and distribution treatment. Reconcile corporate actions and restatements, preserve historical published values, and distinguish official NAV from indicative or estimated intraday values.
Also known as: NAV
Sources and further reading
- Net Asset Value, Investor.gov, U.S. Securities and Exchange Commission