Key takeaways
Net asset value (NAV) equals a fund's or company's total assets less its liabilities.
Investors purchase and redeem open-ended funds based on NAV.
Understanding Mutual Fund NAV
Net asset value (NAV) equals a fund's or company's total assets less its liabilities. When it comes to mutual funds, NAV commonly represents the net asset value per share (NAVPS) of the fund, calculated by dividing the total assets of the fund's portfolio, less total liabilities, by the whole fund share.
Total assets include all the assets in the fund's portfolio, such as stocks, bonds, bank deposits, and other securities. Total liabilities refer to the liabilities taking shape during the operation and financing of the fund, including various expenses payable to others, capital interest payable, etc. Total fund share refers to the total number of funds issued.
For example, if a mutual fund has issued 10 million shares with total assets are 20 million dollars of securities, 10 million dollars in cash, and its total liabilities are 5 million dollars. Then it has a NAV of 25 million dollars and a NAVPS of 2.5 dollars.
Investors purchase and redeem open-ended funds based on NAV. The NAV of a fund is updated at the end of the current trading day and investors can find it on the fund websites or related platforms like moomoo.
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