Investiční slovník
NAV (net asset value): what it is and why it matters
Key takeaways
- NAV (Net Asset Value) is the net asset value of a fund calculated per share unit. A fund typically calculates it once a day after market close.
- For ETFs there is, alongside NAV, an exchange price at which the ETF trades throughout the day. These two values may differ slightly — this is called a premium or discount.
- Arbitrageurs and authorised participants (APs) ensure the gap between the ETF's exchange price and its NAV remains small — through the creation and redemption mechanism.
- For a long-term investor, NAV is key when comparing funds and tracking actual performance — the exchange price can distort the picture in the short term.
How NAV is calculated
The formula is simple: NAV = (total fund assets − liabilities) ÷ number of shares outstanding. Assets include all equities, bonds or other securities the fund holds, plus cash. Liabilities are management fees, any debt or other payables. The result is divided by the total number of issued shares to give NAV per unit. Mutual funds publish NAV typically once a day — after market close, when the final prices of all positions are known.
ETFs: NAV vs. exchange price
For ETFs there is one extra twist. An ETF trades on the exchange throughout the day like a stock — its price moves in real time. But NAV is only calculated once per day. So during trading hours two figures exist: the indicative NAV (a running estimate) and the exchange price at which you actually buy or sell the ETF.
Who keeps prices from diverging
The mechanism that keeps the exchange price close to NAV is called creation and redemption. Specialist traders — authorised participants (APs) — can buy large blocks of ETF shares from the issuer or return them in exchange for the underlying assets. If the ETF is too expensive, APs sell it on the exchange and buy the underlying assets — and vice versa. This arbitrage pushes the price back towards NAV.
Why investors should track NAV
For a long-term passive investor NAV matters in two situations. First, when comparing funds — performance is compared based on NAV movements, not on exchange price. Second, when tracking the true value of a portfolio — brokerage apps today show you the exchange price, but that may only have been current for a few seconds at the moment of calculation. More on how to choose the right ETF in the article what is an ETF and how it differs from a mutual fund or on the ETF overview.
NAV and dividends
When a distributing fund pays a dividend, its NAV falls by the paid amount — just like a stock price on ex-dividend date. With an accumulating fund the dividend stays inside, so it shows up as a rising NAV. That is why you cannot compare the performance of a distributing and an accumulating fund simply by looking at price movements — you need a "total return" view. More on the difference in the article accumulating vs. distributing ETFs.
FAQ
When is NAV published?
Typically once a day after the close of the exchange on which the fund's underlying assets trade. The ETF issuer usually publishes NAV during the evening or at the latest by the following morning.
Can I buy an ETF at NAV?
Not directly. You buy an ETF at the exchange price, which may differ slightly from NAV. For large and liquid ETFs the difference is minimal — typically within 0.1%. For less liquid or more exotic funds it can be higher.
What does it mean when an ETF trades at a discount?
A discount means the ETF's exchange price is below its NAV — you are buying assets for less than they are actually worth. That sounds attractive, but it usually signals lower liquidity or market stress — not a "sale" in the traditional sense.