ETFs and indices · updated October 21, 2026
What is a fund's net asset value (NAV) and how is it calculated
Net asset value (NAV) shows what one unit of a fund is worth: everything the fund owns, minus what it owes, divided by the number of units. With mutual funds you buy and sell at exactly this price, calculated once a day.
Net asset value (NAV) formula
- Fund assets
- The stocks, bonds and cash in the fund, at the day's closing prices.
- Fund liabilities
- Fees still to pay and other obligations.
- Units
- The parts the fund is divided into; each investor holds a number of units.
Worked example
A fund holds securities worth $50.2 million, owes $0.2 million and has 1 million units.
If you invest $1,000, you get 20 units. If the fund's assets rise 10%, the NAV climbs to $55.
How to read net asset value (NAV)
For an ETF, the exchange price moves all day and usually stays very close to NAV, because large institutions create or redeem units whenever a gap appears. Big gaps show up mainly in small funds or on very hectic days.
When net asset value (NAV) can fool you
A low NAV does not mean cheap: a fund with a $10 unit is not cheaper than one with a $500 unit; what matters is what it holds and what it costs. Closed-end funds (like some funds listed on exchanges) can trade at a big discount to NAV for years.
Related terms
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Questions about net asset value (NAV)
When is NAV calculated?
For mutual funds, once a day, after markets close. For ETFs, an estimated NAV is also published every few seconds during the trading day.
What does a discount to NAV mean?
That the exchange price is lower than the value of what the fund owns. You buy assets for less than they are worth, but the discount can stay or even widen.
These explanations are for information only. They are not a recommendation to buy or sell.
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