Net Asset ValueNAV
Net asset value is the value of a fund’s holdings minus its liabilities, usually expressed per share. An ETF can trade slightly above (a premium) or below (a discount) its NAV.
Net asset value is a fund's assets minus its liabilities, usually shown per share. Mutual funds trade at their NAV once a day, while an Exchange-Traded Fund trades on an Exchange all day and can sit slightly above or below its NAV.
- Category
- Trading Basics
- Reading time
- 3 min
- Also called
- NAV per share, Fund value per share, Net asset value per share
- Updated
NAV in plain words
NAV is a fund's total assets minus its total liabilities.1
The per-share NAV is that figure divided by the number of shares outstanding.1
An ETF's share price usually sits a little above or below its NAV per share — trading at a premium or a discount.2
How to work out and use NAV
Add up assets
Total the value of everything the fund holds.
Subtract liabilities
NAV is total assets minus total liabilities.1
Divide by shares
Divide by shares outstanding to get NAV per share.1
Expect daily change
Assets and liabilities change daily, so NAV changes daily.1
Know the fund type
Mutual fund buyers pay the next calculated NAV plus any fees.3
Compare ETF price to NAV
Check whether the ETF trades at a premium or discount.2
Worked examples
Example 1 — NAV rises
NAV upA hypothetical fund holds assets of 1,100 and liabilities of 100, with 100 shares; next day assets reach 1,210.
| NAV per share day 1 | 10.00 |
| NAV per share day 2 | 11.10 |
NAV is assets minus liabilities, divided by shares, so higher assets lift NAV per share.1
Example 2 — Buying at a premium
Premium lostA hypothetical ETF has NAV of 20.00 but trades at 20.40; the premium later disappears.
| Paid | 20.40 |
| Value at NAV | 20.00 |
An ETF's market price can be above its NAV, and arbitrage tends to pull it back, so the premium paid is lost.2
Example 3 — Fair value
Close to NAVA hypothetical ETF trades at 50.01 with NAV of 50.00.
| Price | 50.01 |
| NAV | 50.00 |
Arbitrage generally keeps an ETF's price close to its end-of-day NAV, so the gap here is tiny.2
Mutual fund vs ETF pricing
| Aspect | Mutual fund | ETF |
|---|---|---|
| Trade price | Next calculated NAV | Market price |
| When | Once a day | Throughout the day |
| Premium or discount | No | Yes, can occur |
| Where | With the fund | On an exchange |
Where NAV matters
ETF trading
Checking an Exchange-Traded Fund price against NAV.
Fund choice
Comparing funds for Diversification.
Rebalancing
Using NAV in Rebalancing decisions.
Costs
Seeing how Trading Fees and Commissions and expenses reduce NAV.
Advantages and disadvantages
Advantages
- Simple measure of fund value.
- Published every business day.
- Helps spot ETF premiums or discounts.
- Shows the effect of fund expenses.
Disadvantages
- Lags fast-moving markets.
- Hard to value illiquid holdings.
- ETF price can still drift from NAV.
- Not a guide to future returns.
Going deeper
Read as far as you need. Each level builds on the one before it.
Daily calculation
Beginner
Mutual funds and UITs usually calculate NAV at least once each business day, net of fees and expenses.3
ETF arbitrage
Intermediate
Timing mismatch
Advanced
iShares notes premiums and discounts can also come from a timing mismatch between when NAV is calculated and when the ETF's trading window closes.5
Common mistakes
Treating NAV as cheap or expensive
A low NAV per share does not mean a bargain.
Ignoring ETF premiums
Check price against NAV in volatile markets.
Forgetting fees
Expenses are taken from NAV.
Comparing NAV across funds
Different share counts make it meaningless.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- NAV is assets minus liabilities.
- Per-share NAV divides by shares outstanding.
- NAV changes daily.
- Mutual funds trade at NAV.
- ETFs can trade at a premium or discount.
Frequently asked questions
Is NAV the same as share price?
How often is NAV calculated?
Why does an ETF trade at a discount?
Further learning
- Exchange-Traded Fund
How ETFs trade.
- Diversification
Why funds spread risk.
- Rebalancing
Keeping the mix.
- Bid-Ask Spread
ETF trading costs.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- Investor.gov (SEC). Net Asset Value (opens in a new tab) Checked .
- Investor.gov (SEC). Updated Investor Bulletin: Exchange-Traded Funds (ETFs) (opens in a new tab) Checked .
- Investor.gov (SEC). Mutual Funds (opens in a new tab) Checked .
- Investor.gov (SEC). Characteristics of Mutual Funds and Exchange-Traded Funds (ETFs) – Investor Bulletin (opens in a new tab) Checked .
- iShares (BlackRock). All about ETPs: Premiums and discounts (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.