What it is
Net asset value, or NAV, is the fundamental value of a fund's share. It is determined daily by taking the total market value of all securities and other assets held by the fund, subtracting any liabilities, and then dividing that result by the number of outstanding shares. For mutual funds, NAV is typically calculated once per day at market close and is the price at which shares are bought and sold.
For exchange-traded funds (ETFs), NAV is also calculated daily, but their market price can fluctuate throughout the trading day based on supply and demand, potentially trading at a premium or discount to their NAV. Authorized participants use the NAV as a benchmark for the creation and redemption of ETF shares, a process that helps keep the ETF's market price closely aligned with the value of its underlying assets, minimizing significant deviations.
Why it matters
Understanding NAV helps retail investors assess if an ETF's market price accurately reflects the value of its underlying holdings.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice