Net Asset Value

The net value of an investment fund's assets minus its liabilities, typically expressed on a per-share basis.

Net Asset Value (NAV) represents the intrinsic per-share dollar value of an investment fund, such as a mutual fund, exchange-traded fund (ETF), or closed-end fund. It is calculated by taking the total market value of all securities, cash, and other assets held by the fund, subtracting any liabilities (such as accrued management fees, administrative expenses, and debt), and dividing the result by the total number of outstanding shares. For traditional mutual funds, the NAV is calculated once at the end of each trading day, typically after the major exchanges close at 4:00 PM Eastern Time. This daily NAV is the exact price at which investors buy or sell shares directly with the fund company. For ETFs and closed-end funds, NAV is also calculated daily for accounting purposes, but the shares themselves trade continuously on an exchange throughout the day at market-determined prices. Investors monitor NAV to evaluate whether a fund is trading at a fair price. While mutual funds always trade at their exact NAV, ETFs and closed-end funds can trade at a premium (above NAV) or a discount (below NAV) due to supply and demand forces. A persistent or widening gap between an ETF's market price and its NAV can signal liquidity issues in the underlying assets or structural friction in the fund's creation and redemption process.

An exchange-traded fund holds $100 million in equities, $5 million in cash, and has accrued $1 million in management fees and other liabilities. If the fund has 5 million outstanding shares, the NAV is calculated as ($100,000,000 + $5,000,000 - $1,000,000) / 5,000,000 = $20.80 per share.