Investing term

What is Net asset value?

NAV — the fair value of one fund share, computed from the underlying holdings.

Net asset value (NAV) is the fair, per-share value of a fund, calculated from the market value of everything it holds minus its liabilities, divided by shares outstanding. Mutual funds transact exactly at NAV once a day; ETFs trade near it all day thanks to the creation/redemption mechanism. It's the anchor that tells you what a fund share is actually worth.

For example

A fund holding $100M of assets with 5M shares has a NAV of $20 — the value behind each share, regardless of any short-term trading quirks.

Net asset value is taught hands-on in Stage 6 — Index Funds, ETFs & Mutual Funds.

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Related terms

Active fundA fund whose manager picks stocks in the hope of beating a benchmark.BenchmarkThe reference index a fund compares itself to — e.g. the S&P 500, MSCI World, or Bloomberg Aggregate.Creation/redemptionThe mechanism that keeps ETF prices close to NAV. Authorized participants swap baskets of underlying stocks for ETF shares (or vice versa).DistributionThe income a fund pays out to its shareholders — dividends from stocks held, plus realized capital gains.
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