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Net Asset Value (NAV)

Definition

NAV represents the per-share value of a mutual fund or ETF, calculated by dividing the total value of all assets minus liabilities by the number of outstanding shares.

Explanation

NAV is calculated at the end of each trading day for mutual funds. It reflects the market value of a fund's holdings and is the price at which investors buy and redeem fund shares. For ETFs, NAV serves as a reference — actual trading prices may differ slightly due to supply and demand.

Example

A mutual fund holds $500M in securities and $20M in cash, with $10M in liabilities and 25M shares outstanding. NAV = ($500M + $20M - $10M) / 25M = $20.40 per share.

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