What is Net Asset Value? Definition, Formula, and Example
Net asset value is the per-share value of a fund's holdings minus liabilities, calculated after the market close.
What is Net Asset Value
Net asset value is the per-share value of an exchange-traded fund or mutual fund's total holdings minus liabilities, divided by shares outstanding. It represents the underlying value of one share based on the portfolio's closing prices.
How it's Calculated
Formula: NAV = (Total Assets - Total Liabilities) / Shares Outstanding
Total assets include the market value of all securities plus cash. Liabilities include management fees and other fund expenses. The calculation uses closing prices from the primary exchange and is published after the market close.
Worked Example
An ETF holds $1 billion in stocks, $50 million in cash, and owes $10 million in fees and expenses. It has 20 million shares outstanding.
NAV = (1,050,000,000 - 10,000,000) / 20,000,000 = $52.00
Each share represents $52 of underlying net value.
When Traders Use It
ETF traders compare the intraday market price to NAV to identify premiums or discounts. When an ETF trades above NAV, it carries a premium; below NAV, it trades at a discount. Authorized participants arbitrage these differences through creation and redemption mechanisms. the live scanner
Limitations / Common Misconceptions
NAV is calculated once daily after the close, so intraday NAV estimates are approximations based on real-time prices. For international ETFs, underlying markets may be closed when the ETF trades, causing persistent premiums or discounts that do not necessarily signal mispricing. NAV does not reflect trading costs, bid-ask spreads, or tracking error.