Markets · 6 pages · 12 min
Why the NAV is a calculation
Net asset value is assets minus liabilities, divided by shares, not a bargain struck all day.
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From the opening
Net asset value is an arithmetic result: the fund's assets minus its liabilities, divided by the number of shares outstanding. It is calculated from the prices of the holdings and from the fund's accruals, usually at the end of the trading day for a traditional mutual fund. The opening covers assets minus liabilities per share, holdings are marked to prices, and orders wait for the next NAV.
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Inside
- Assets minus liabilities per share
- Holdings are marked to prices
- Orders wait for the next NAV
- Hard-to-price assets need estimates
- Where the idea stops applying
- A distinction worth keeping
Sources
- Net asset value calculation
- Forward pricing of mutual funds