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 the number of shares outstanding. It's the honest anchor that says what one share is actually worth, stripped of any short-term trading quirks.
Mutual funds transact exactly at NAV, calculated once a day after the close. ETFs trade near their NAV all day, thanks to the creation/redemption mechanism, but their live market price can sit a touch above (a premium) or below (a discount) it. Either way, NAV is the reference point — the value of the underlying holdings that a fund share represents.
NAV is the value of a fund's holdings minus liabilities, divided by shares: $100M over 5M shares is $20 a share. Mutual funds trade exactly at NAV; ETFs stay close to it.
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.
Learn it by doing
That's Net asset value in theory — it clicks when you use it. Practise it hands-on in a free, interactive lesson (Stage 6, Index Funds, ETFs & Mutual Funds).
Try the free lesson →Why it matters to you
NAV matters because it's the benchmark for what a fund share is genuinely worth, which lets you judge whether you're paying a fair price. For mutual funds you always transact at NAV, so it's simply the price. For ETFs, comparing the market price to NAV reveals any premium or discount — usually tiny, but occasionally meaningful in stressed or thinly traded markets, where you could overpay or undersell versus the holdings.
⚠ Confusing an ETF's price with its NAV
An ETF's live market price and its NAV are usually almost identical, but not always. In a panic or for a thinly traded ETF, the price can gap from NAV, so buying at the market price could mean paying a premium over what the holdings are worth. Checking the premium or discount before trading a less-liquid ETF avoids overpaying.