Last updated: Jan 18, 2024

NAV Calculator — Net Asset Value

Q: What is a mutual fund?

A mutual fund is a financial vehicle set up by pooling together money from different investors to invest in the market . The fund is usually managed by a portfolio manager, who can be a person, a team of people, or a company. Read more

Q: What is a ETF?

ETFs, which stand for exchange-traded funds , are financial instruments built to track the performance of an index, asset, sector, etc. ETFs can be interpreted as mutual funds that issue shares traded on exchanges. Read more

Q: What is a closed-end fund?

A closed-end fund is a mutual fund that can only issue a fixed number of shares to the market. As no additional shares will be issued and the shares are traded on the market, the shares tend to fluctuate with the market. Read more

Q: What is an open-end fund?

An open-end fund is a mutual fund that can issue an unlimited number of shares to investors who want to buy them. The shares normally have a fixed price based on their NAV and do not fluctuate due to market forces. Read more

Q: How can I calculate NAV per share?

The NAV calculation requires 3 steps: Calculate the value of the fund assets. Determine the fund's liabilities. Apply the NAV formula: NAV = fund assets − fund liabilities Divide the NAV by the number of shares to obtain NAV per share. Read more

Q: Is NAV a good metric to measure fund performance?

Yes , NAV is a good metric to analyze the fund performance. It is the difference between the assets and liabilities of the fund. We commonly interpret this metric as the market value of the fund . Read more

Table of contents

What is net asset value? — Net asset value definition How to calculate the net asset value? — The net asset value formula How to measure performance of investment funds using NAV? — NAV calculator in practice FAQs

With this NAV calculator, you can easily calculate the net asset value of an investment fund. The net asset value (NAV) can help you calculate the value of most investment funds. Hence, it is essential to understand the NAV meaning and calculation.

This article will help you understand what net asset value is and how to calculate this metric using the net asset value formula. We will also show you its application by demonstrating some examples.

💡 To learn more about investments and their performance, please check out our investment calculator.

What is net asset value? — Net asset value definition

The net asset value, or NAV for short, is defined as the difference between the assets and liabilities of an investment fund. As an investment fund is usually a pool of money from various investors, we commonly interpret this metric as the market value of the fund.

However, it is important to note that not all NAV of investment funds is equivalent to their fund value. This is because the value of the fund tends to fluctuate with the forces of demand and supply in the market. For example, two similar investment funds will have different market values if their demands differ from those of market investors.

How to calculate the net asset value? — The net asset value formula

After understanding what NAV is, it's time to learn how to calculate NAV.

Let's take Fund Alpha with the information below as an example:

Total investment value: $1,500,000
Cash and cash equivalents: $250,000
Accounts receivable: $75,000
Short-term liabilities: $450,000
Long-term liabilities: $600,000
Number of shares outstanding: 200,000

The NAV calculator requires three steps:

Calculate the fund assets:

The fund assets are defined as the value of assets owned by the investment fund. It can be calculated using the formula below:

fund assets = total investments + cash + receivable

The fund assets for Fund Alpha is $1,500,000 + $250,000 + $75,000 = $1,825,000.
Calculate the fund liabilities:

The fund liabilities are the value of the liabilities and debts owed by the investment fund. You can find the fund liabilities using the formula below:

fund liabilities = short-term liabilities + long-term liabilities

Thus, the Fund Alpha's fund liabilities is $450,000 + $600,000 = $1,050,000.
Calculate the net asset value (NAV):

The net asset value, NAV is the difference between the fund assets and fund liabilities, and you can estimate it using the net asset value formula:

NAV = fund assets - fund liabilities

Hence, the Fund Alpha's NAV is $1,825,000 − $1,050,000 = $775,000.

To determine the value of each share of the fund, we need to calculate the NAV per share. We can calculate this metric using the other NAV formula below:

NAV per share = NAV / number of shares

Using this formula, the Fund Alpha's NAV per share is $775,000 / 200,000 = $3.88.

Now you know how to calculate NAV by hand. Still, isn't it quicker to use our NAV calculator?

💡 Along with NAV per share, two other important measurements of an investment are explored in our debt to asset ratio calculator and the earnings per share calculator.

How to measure performance of investment funds using NAV? — NAV calculator in practice

After understanding how to calculate net asset value, it's time to discuss how to apply this metric to our analysis of investment funds:

The easiest way to analyze the performance of an investment fund is to measure the NAV per share differential between two dates.
For instance, let's say the NAV per share of Fund Alpha is $3.88 in 2020, and the NAV per share of Fund Alpha in 2021 is $4.50. This means that the value of the investment fund's shares has increased by approximately 16%. We can interpret this number as the performance of the investment fund.
Hence, the higher the NAV per share differential over time, the better the investment performance of the fund.

FAQs

What is a mutual fund?

A mutual fund is a financial vehicle set up by pooling together money from different investors to invest in the market. The fund is usually managed by a portfolio manager, who can be a person, a team of people, or a company.

What is a ETF?

ETFs, which stand for exchange-traded funds, are financial instruments built to track the performance of an index, asset, sector, etc. ETFs can be interpreted as mutual funds that issue shares traded on exchanges.

What is a closed-end fund?

A closed-end fund is a mutual fund that can only issue a fixed number of shares to the market. As no additional shares will be issued and the shares are traded on the market, the shares tend to fluctuate with the market.

What is an open-end fund?

An open-end fund is a mutual fund that can issue an unlimited number of shares to investors who want to buy them. The shares normally have a fixed price based on their NAV and do not fluctuate due to market forces.

How can I calculate NAV per share?

The NAV calculation requires 3 steps:

Calculate the value of the fund assets.
Determine the fund's liabilities.
Apply the NAV formula:

NAV = fund assets − fund liabilities
Divide the NAV by the number of shares to obtain NAV per share.

Is NAV a good metric to measure fund performance?

Yes, NAV is a good metric to analyze the fund performance. It is the difference between the assets and liabilities of the fund. We commonly interpret this metric as the market value of the fund.