Net Asset Value (NAV)
NAV is the per-share value of a mutual fund or ETF, calculated by dividing total assets minus liabilities by the number of outstanding shares.
🎬 Video Explanation
Exam Tip
NAV is calculated at 4 PM ET. Orders after 4 PM get NEXT day's NAV.
What is Net Asset Value (NAV)?
Net Asset Value represents the per-share value of a fund's holdings. It's the price at which you buy (at NAV + any load) or sell (at NAV) mutual fund shares.
NAV Formula
NAV = (Total Assets - Total Liabilities) / Shares Outstanding
Example Calculation
- Total Assets: $100 million
- Total Liabilities: $2 million
- Shares Outstanding: 4 million
NAV = ($100M - $2M) / 4M = $24.50 per share
When is NAV Calculated?
- Mutual Funds - Once daily at 4:00 PM ET (market close)
- ETFs - Have NAV but trade at market prices throughout the day
NAV and Fund Pricing
| Order Time | Price Received |
|---|---|
| Before 4 PM ET | Same-day NAV |
| After 4 PM ET | Next-day NAV |
This is called forward pricing - you don't know the exact price until after market close.
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Mutual Fund
A mutual fund is a professionally managed investment vehicle that pools money from multiple investors to purchase a diversified portfolio of securities.
Exchange-Traded Fund (ETF)
An exchange-traded fund (ETF) is an investment fund that trades on stock exchanges like individual stocks, typically tracking an index while offering diversification, low costs, and tax efficiency.
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