Net asset value (NAV)



Key Takeaways

  1. The net asset value is the value of an investment fund’s total assets divided by the number of its units, minus costs, and fees.
  2. NAV is used by the investor to find potential investment opportunities in the market.
  3. NAV of the mutual fund represents the amount an investor has to pay for a single unit of that mutual fund

The net asset value is the value of an investment fund’s total assets divided by the number of its units, minus costs, and fees.

Example

An MF’s unit price is the same as its Nav. But for an ETF, the Nav is not its unit price as the unit could be trading at a premium or discount to the Nav on the exchange.

Net asset value meaning / What do you mean by NAV?

The net asset value is calculated to present the net worth of an entity’s asset. It is calculated as the value of an investment fund’s total assets minus its total liabilities divided by the number of units. NAV is used by the investor to find potential investment opportunities in the market. NAV is generally used to calculate the value of mutual funds, exchange-traded funds (ETFs), and indexes in the share market. Such funds are required to register with the US Securities and Exchange Commission (SEC), and their NAV is estimated at the end of each trading day according to the closing market price.

NAV of mutual fund

NAV of the mutual fund represents the amount an investor has to pay for a single unit of that mutual fund. For example, the NAV of ABC funds is Rs. 55 than to purchase 30 units of ABC mutual funds, the investor will have to pay Rs. 1,650. We can say that NAV is the price per unit of a mutual fund.

How do you calculate NAV?

Net Asset value = (Assets-Liabilities)/(Number of outstanding Units)