Glossary term
Net Asset Value (NAV)
Net asset value, or NAV, is the value of a fund's assets minus its liabilities, usually shown as a per-share value for mutual funds, ETFs, and similar investment companies.
Updated
Read time
What Is Net Asset Value (NAV)?
Net asset value, or NAV, is the value of a fund's assets minus its liabilities. For mutual funds, ETFs, and other investment companies, NAV is usually discussed as a per-share value because investors buy and sell shares of the fund rather than owning each underlying security directly.
NAV gives investors a way to understand the accounting value of the fund's portfolio. It is not the same thing as a stock price, and for exchange-traded funds it is not always the same as the market price investors see during the trading day.
Key Takeaways
- NAV is a fund's assets minus its liabilities.
- Per-share NAV divides that net value by the number of shares outstanding.
- Mutual fund transactions generally happen at NAV after the market close.
- ETF market prices can trade slightly above or below NAV during the day.
- NAV helps investors understand fund value, but it does not tell the whole story about fees, performance, taxes, or risk.
Net Asset Value Formula
The basic NAV formula is:
For per-share NAV, the fund divides that net value by the number of fund shares outstanding. In plain English, the calculation asks what the fund owns, subtracts what it owes, and spreads the remaining value across the shares investors hold.
How NAV Works
A fund's holdings can change in value every day. Stocks, bonds, cash, accrued income, expenses, and other fund positions all feed into the calculation. Because those values move, NAV also moves. Mutual funds and unit investment trusts generally calculate NAV at least once each business day, usually after major U.S. exchanges close.
When a mutual fund investor buys or sells shares, the trade usually settles at the next calculated NAV, adjusted for any applicable fees or loads. That makes mutual fund pricing different from ordinary stock trading, where buyers and sellers trade continuously at market prices during the day.
NAV Versus Market Price
NAV is the fund's portfolio value per share. Market price is the price at which shares actually trade between buyers and sellers. For a traditional mutual fund, the transaction price is usually based on NAV. For an ETF, shares trade on an exchange throughout the day, so the ETF's market price can move slightly above or below NAV.
Measure | What it shows |
|---|---|
NAV | The fund's net portfolio value per share |
Market price | The exchange price buyers and sellers agree on |
Small ETF premiums or discounts can happen because market prices update continuously while NAV is calculated from the value of the underlying portfolio. Large or persistent gaps deserve closer review.
Why NAV Matters
NAV helps investors compare the value of fund shares with the assets behind them. It also anchors mutual fund purchase and redemption prices. But NAV by itself does not show whether a fund is a good investment. A low NAV does not mean a fund is cheap, and a high NAV does not mean it is expensive. Performance, holdings, strategy, fees, taxes, and risk matter more than the absolute NAV number.
The Bottom Line
Net asset value is a fund's assets minus its liabilities, usually expressed as a per-share value. It is the core pricing anchor for mutual funds and an important reference point for ETFs, but investors should use it alongside fees, performance, holdings, and risk rather than treating NAV as a complete valuation signal.