NAV (Net Asset Value)

NAV is a fund’s per-share value: total assets minus liabilities divided by shares.

A real-world scenario

An ETF holds a basket of stocks worth $50.20 per share, but on the exchange it briefly trades at $50.35. An authorised participant instantly buys the basket and sells the ETF shares, pocketing the 15-cent gap, and the price snaps back toward NAV within seconds. The scenario runs continuously in the background of every ETF: the arbitrage mechanism is what keeps the exchange price honest, and it is why you can trust a fund’s price to reflect its holdings.

Why it matters

It is the fair price of a fund’s holdings, the backbone of fund pricing.

Common confusion

ETFs trade near NAV; closed-end funds can wander far from it.

Worked example

How investors use it

When you buy a fund, check how its market price relates to NAV. A persistent premium or discount tells you something about demand and structure; for index ETFs the gap is usually a few cents, for closed-end funds it can be a real edge or trap.

Key takeaway

NAV is the per-share value of a fund’s holdings, and it is the anchor that keeps prices honest. Mutual funds price once daily at NAV; ETFs trade near it because arbitrage snaps any gap shut within seconds; closed-end funds wander because their supply is fixed. Before buying any fund, check how its price relates to NAV, because a persistent premium or discount tells you about demand and structure. The value and the price are two different numbers that usually sit close together — and the gap is the story.

Definitions reviewed by the Investing Glossary editorial team.