Net asset value, or NAV, is what a fund is worth after its debts: everything it owns at current prices minus everything it owes. Divided by the shares outstanding, it becomes NAV per share, the number in a mutual fund quote. US mutual funds must calculate it at least once every business day and use it as the price for every share they issue or redeem, while ETFs publish it as the yardstick for their exchange price. The stocks hub covers fund investing more broadly, and what is an ETF explains how exchange-traded funds are built.
How do you calculate net asset value?
Add up the fund's assets at current values, subtract its liabilities, and divide what is left by the number of shares outstanding.
SEC Rule 2a-4 sets out what goes in. Securities with readily available market quotations count at market value, and everything else at fair value as determined in good faith by the fund's board. The fund's own trades, and changes in its share count from purchases and redemptions, must show up no later than the first calculation on the next business day. Expenses, including the adviser's fee, are included up to the date of calculation, which is how the expense ratio reaches shareholders, and so are dividends receivable and interest earned.
Worked example: Striking a stock fund's NAV at the close
A stock fund's books at the 4 p.m. close:
- Securities at closing prices: $512.4 million
- Cash: $3.1 million
- Dividends and interest receivable: $0.65 million
- Money due from investors who bought shares: $1.25 million
- Total assets: $517.4 million
- Liabilities: $2.9 million owed for securities bought, $1.1 million owed to redeeming investors and $0.4 million of accrued fees and expenses, $4.4 million in all
- Net assets: $517.4 million − $4.4 million = $513.0 million
- NAV per share with 20,520,000 shares outstanding: $513.0 million ÷ 20,520,000 = $25.00
An order for $10,000 that reached the fund at 2:15 p.m. buys 400 shares at $25.00. If the share class charges a 5.75% front-end sales load, $575 goes to the selling broker and $9,425 buys 377 shares, an effective price of $26.53 a share.
When is NAV calculated, and which price do you get?
Most US funds compute NAV once each business day, as of the 4 p.m. Eastern market close, and every order fills at the next NAV after it arrives.
That is forward pricing, required by SEC Rule 22c-1: a fund may sell or redeem shares only at a price based on the NAV next computed after it receives the order. The rule leaves the timing to the fund's board, and the SEC notes that funds typically calculate after the major US exchanges close. An order the fund receives at 3:58 p.m. gets that day's NAV; one it receives at 4:02 p.m. gets the next business day's, whatever happens overnight. Neither investor knows the exact price when placing the order.
Rule 22c-1 also lets a mutual fund, though not a money market fund or an ETF, use swing pricing. When net purchases or redemptions cross a threshold the board has approved, the fund can adjust its NAV by a swing factor capped at 2%, so that the trading costs of the flows fall on the investors coming or going rather than on those who stay.
What is an ETF's intraday indicative value?
An intraday indicative value, also called iNAV or IIV, is an estimate of an ETF's NAV published during the trading day from its basket or index.
For years, exchange listing standards required ETFs to disseminate one at least every 15 seconds during regular trading hours. When the SEC adopted Rule 6c-11 in 2019, it chose not to require an IIV because of doubts about its accuracy: the estimate can be stale for ETFs holding foreign securities or bonds that trade infrequently, and in fast markets dissemination lags can leave it behind even for frequently traded holdings. The listing standards the SEC approved in 2020 for ETFs relying on the rule, such as NYSE Arca's Rule 5.2-E(j)(8), contain no IIV requirement.
Products still bound by one under other listing rules must keep it flowing. NYSE Arca's January 2026 compliance letter says a required IIV must go out through major market data vendors at least every 15 seconds during the core session, and the exchange may halt trading if it stops. Treat any IIV as a rough guide; the official figures are the prior day's NAV, market price and premium or discount that an ETF posts each morning.
What are ETF premiums and discounts?
A premium is the percentage by which an ETF's market price exceeds its NAV at the time NAV is struck; a discount is the reverse.
Rule 6c-11 defines the market price as the official closing price, or the midpoint of the national best bid and offer at the time NAV is calculated if that better reflects the share's value. Each business day, an ETF relying on the rule must post the prior day's NAV, market price and premium or discount, plus a table and line graph covering the last calendar year and the quarters since. If its premium or discount exceeds 2% for more than seven consecutive trading days, it must also post a statement saying so, with the factors it believes caused the gap, and keep it online for a year.
Worked example: What a premium and a discount cost in dollars
- Calm day: an ETF's NAV is $50.00 and it closes at $50.04. Premium: ($50.04 − $50.00) ÷ $50.00 = +0.08%. Buying 400 shares costs $20,016 for holdings worth $20,000, $16 over NAV.
- Stress day: a corporate bond ETF strikes a NAV of $100.00 and closes at $96.35, about the asset-weighted gap ICI measured for investment-grade bond ETFs on March 12 and March 19, 2020. Discount: ($96.35 − $100.00) ÷ $100.00 = −3.65%. Selling 200 shares raises $19,270, which is $730 less than their share of the NAV.
- Round trip: buy at a 0.10% premium and sell at a 0.10% discount with NAV unchanged, and you give up about 0.20% of the trade, on top of the bid-ask spread and any commission.
A discount is not always a bargain or a loss, because the NAV can be the stale number. ICI argued that in March 2020 bond ETF prices reflected the market better than NAVs built partly from earlier trades and evaluated estimates for bonds that had not traded that day. IOSCO's review of that month found the largest median discounts among US ETFs were about 2% for investment-grade and high-yield bond funds and 0.5% for equity and government bond funds, while a few bond ETFs briefly traded 6% to 10% below NAV. Time zones open gaps too: for an ETF listed in Asia that tracks a US index, IOSCO notes, the closing price and the NAV can be set more than ten hours apart. In normal markets, large dealers hold big stock ETFs close to NAV by creating and redeeming shares, the arbitrage set out in ETF creation and redemption.
How is NAV different from market price and book value?
NAV is what a fund's holdings are worth per share once a day; market price is what buyers pay; book value is a company accounting figure.
| Term | What it measures | When it is set | Where you see it |
|---|---|---|---|
| NAV per share | Net assets divided by shares outstanding | Once a business day, usually at the 4 p.m. Eastern close | Mutual fund quotes, ETF websites |
| Market price | The price an ETF or closed-end fund share trades at | Continuously while the exchange is open | Broker quotes; the SPY page shows one |
| Intraday indicative value | An estimate of NAV during the day | Every 15 seconds, where still required | Market data feeds |
| Public offering price | NAV plus any front-end sales load | At each purchase of a load fund | The price paid for load share classes |
| Total net assets | The fund's net assets in dollars, not per share | Each business day | Fact sheets and shareholder reports |
| Book value | A company's shareholders' equity at accounting values | Each quarterly balance sheet | Company filings; see price-to-book ratio |
Two other fund types show NAV differently. Government and retail money market funds may use amortized-cost valuation and penny rounding under Rule 2a-7 to hold a stable $1.00 share price, while other money market funds must round their NAV to the fourth decimal place, as how money market funds work explains. Listed closed-end funds publish a NAV but have no creation or redemption to pull their price toward it, and FINRA notes that most have historically traded at a discount.
What mistakes do people make with NAV?
The most common mistake is reading NAV per share as a sign of value or cheapness, when what matters is how it changes with distributions added back.
- Treating a drop on a distribution date as a loss. When a fund pays a dividend or a capital gains distribution, NAV falls by the amount paid out on the ex-date; the value moves into your cash or new shares rather than disappearing.
- Expecting a mid-day mutual fund order to fill at mid-day prices. It fills at the next NAV, so a sharp move after you place it still sets your price.
- Taking an IIV as exact. For foreign or bond holdings it can lag the true value, which is why the SEC declined to require it.
- Reading a foreign-stock fund's NAV as a sum of local closing prices. Overseas markets shut hours before New York, and the SEC notes that a fund's NAV uses fair value when market quotations are not readily available, so the two can differ.
- Mixing NAV returns with market-price returns. Over short periods an ETF's return at NAV and at market price can differ because its premium or discount changes; check which one a chart shows.
How the two fund wrappers differ in trading and cost is covered in ETFs vs mutual funds vs index funds.