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Funds & ETFsGlossary

Net asset value (NAV)

Net asset value (NAV) is a fund's total assets minus its liabilities; per share, it sets the price of mutual fund trades. Definition and a worked example.

Also called: NAV, NAV per share

By The Token Thesis Desk1 min read4 cited sources

An antique cast-iron weighing scale
“Báscula - balanza - pesa” by Luis Miguel Bugallo Sánchez (Lmbuga) — CC BY-SA 3.0 (edited: cropped, recolored)

Quick answer

Net asset value (NAV) is a fund's total assets minus its total liabilities. Divided by the number of shares outstanding, it gives NAV per share — the price, before fees, at which U.S. mutual fund shares are bought and redeemed.

What does net asset value mean?#

Investor.gov defines the net asset value of an investment company as its total assets minus its total liabilities, and NAV per share as that figure divided by the number of shares outstanding[1]. U.S. mutual funds generally must calculate NAV at least once every business day, typically after the major U.S. exchanges close[1].

Because the fund's assets and liabilities change daily, NAV changes daily too[1]. When you buy a mutual fund, you pay the next calculated NAV plus any purchase fees; when you sell, you receive the next NAV minus any redemption fees[2].

How is NAV calculated?#

Worked example

NAV for an illustrative fund

A fund holds $20.6 million of assets and owes $0.6 million, with 1.6 million shares outstanding. Its NAV is $20 million, or $12.50 per share, so $1,000 buys 80 shares before fees. If the assets are worth $20.9 million the next day, NAV per share becomes about $12.69.

StepValue
Total assets$20,600,000
Minus total liabilities$600,000
Net asset value$20,000,000
Divided by shares outstanding (1,600,000)$12.50 per share
Next day, assets $20.9M: NAV per share$12.69

Figures computed in code from the stated inputs; rounded to the nearest cent or tenth.

How is NAV different for ETFs?#

ETFs have a NAV too, but retail investors trade ETF shares on an exchange at market prices that may or may not equal NAV[3]. When the market price is above NAV the ETF trades at a premium; below it, at a discount[4]. The SEC explains that when large firms called Authorized Participants trade on such a gap, the ETF's market price tends to move back in line with its NAV per share[4].

For more, read what a mutual fund is, what an ETF is and ETF vs mutual fund.

Sources

Numbers in brackets in the text point here. Grade A = primary source (regulator, statistics agency, law or official document).

  1. 1
    Net Asset Value (glossary)U.S. SEC — Investor.gov (n.d.) · Grade A
  2. 2
    Mutual FundsU.S. SEC — Investor.gov (n.d.) · Grade A
  3. 3
    Exchange-Traded Funds (ETFs)U.S. SEC — Investor.gov (n.d.) · Grade A
  4. 4
    Updated Investor Bulletin: Exchange-Traded Funds (ETFs)U.S. SEC — Investor.gov (2023) · Grade A

How we checked this note

Every number, date and rule above links to its source. This note cites 4 sources, 4 of them primary (Grade A). Worked examples were calculated in code, and a second editor compared each figure with its source before publishing. Spotted an error? Tell us — corrections are listed on the note. Read our editorial policy.