NAV
InvestingDefinition
Net Asset Value (NAV) represents the net value of a fund and is calculated by taking the total market value of all assets and subtracting all liabilities. It is the per-share value of a mutual fund or ETF.
What is included in "Total Assets"? It is not just shares of underlying stocks or bonds. It includes:
• The investment portfolio: the current market value of all securities held (stocks, bonds, etc.).
• Cash and cash equivalents: any non-invested cash sitting in the fund’s accounts.
• Receivables: dividends or interest that have been declared but not yet collected.
Do mutual funds have liabilities? Yes. Common liabilities deducted to find the true “net” value include:
• Accrued expenses: management fees, custodian fees, and administrative costs owed to the fund company.
• Payables: money owed for securities that were purchased but haven’t settled yet.
• Dividend distributions: dividends declared to shareholders but not yet paid out.
For a mutual fund, NAV is calculated once a day at market close and is the price at which investors buy and sell. For ETFs, NAV is calculated intraday, but market price can diverge slightly (a small premium or discount) depending on supply and demand on the exchange. Authorized participants arbitrage any gap between ETF market price and NAV by creating or redeeming shares, so liquid ETFs track NAV within a few basis points. Illiquid funds or closed-end funds can trade 5–15% above or below NAV for long stretches.
Price-to-NAV is also a common valuation tool for REITs. A REIT trading above NAV is said to be priced at a premium; below NAV, at a discount.
Summary: NAV is a comprehensive “clean” number. It accounts for everything the fund owns (including cash) minus everything the fund owes, providing the most accurate per-share value at the end of each trading day. While ETFs trade throughout the day and can vary slightly from their NAV, mutual funds always trade exactly at the NAV calculated after the market closes.
What is included in "Total Assets"? It is not just shares of underlying stocks or bonds. It includes:
• The investment portfolio: the current market value of all securities held (stocks, bonds, etc.).
• Cash and cash equivalents: any non-invested cash sitting in the fund’s accounts.
• Receivables: dividends or interest that have been declared but not yet collected.
Do mutual funds have liabilities? Yes. Common liabilities deducted to find the true “net” value include:
• Accrued expenses: management fees, custodian fees, and administrative costs owed to the fund company.
• Payables: money owed for securities that were purchased but haven’t settled yet.
• Dividend distributions: dividends declared to shareholders but not yet paid out.
For a mutual fund, NAV is calculated once a day at market close and is the price at which investors buy and sell. For ETFs, NAV is calculated intraday, but market price can diverge slightly (a small premium or discount) depending on supply and demand on the exchange. Authorized participants arbitrage any gap between ETF market price and NAV by creating or redeeming shares, so liquid ETFs track NAV within a few basis points. Illiquid funds or closed-end funds can trade 5–15% above or below NAV for long stretches.
Price-to-NAV is also a common valuation tool for REITs. A REIT trading above NAV is said to be priced at a premium; below NAV, at a discount.
Summary: NAV is a comprehensive “clean” number. It accounts for everything the fund owns (including cash) minus everything the fund owes, providing the most accurate per-share value at the end of each trading day. While ETFs trade throughout the day and can vary slightly from their NAV, mutual funds always trade exactly at the NAV calculated after the market closes.
Formula
NAV = (Total assets − Total liabilities) / Shares outstanding
Example
A fund holds $10B in assets, $50M in liabilities, 500M shares outstanding. NAV = ($10B − $50M) / 500M = $19.90 per share. If the ETF trades at $19.93 on the exchange, that’s a 0.15% premium to NAV.
Related tool
Open the reit tool on Arsenal.finance →