NAV is the price per share of a mutual fund or ETF, calculated by dividing the fund's total assets minus liabilities by the number of shares outstanding

NAV stands for net asset value. It is the dollar amount that one share of a fund is worth on any given day. When you buy a mutual fund, you are not buying a piece of a single company — you are buying a share of a pool of many investments. NAV tells you what your share of that pool costs.

The calculation is straightforward: take all the stocks, bonds, or other holdings the fund owns, subtract what the fund owes (expenses, fees, debt), and divide by the number of shares that exist. That number is the NAV. A fund might have a NAV of $47.32 per share one day and $47.89 the next, depending on whether the stocks inside it went up or down.

NAV matters because it is the price you actually pay when you buy a mutual fund through a broker or directly from the fund company. Unlike stocks, which trade throughout the day at constantly changing prices, mutual fund shares are priced once per day, usually after the market closes at 4 p.m. Eastern time. That single daily price is the NAV.

Key Takeaways

  • NAV is calculated once per day for mutual funds, after the market closes, and represents the exact price you pay or receive when you buy or sell shares.
  • The NAV changes based on the value of the investments inside the fund, not based on what other buyers and sellers are willing to pay.
  • ETFs trade throughout the day like stocks and have a market price that can differ slightly from NAV, creating opportunities for traders but not affecting long-term investors.
  • You can find a fund's NAV on the fund company's website, your brokerage account, or financial data sites like Yahoo Finance or Morningstar.

How NAV differs from the market price of ETFs

Mutual funds and ETFs are priced differently, and this difference matters if you own an ETF. A mutual fund's NAV is the only price at which you can buy or sell — there is no negotiation, no market price. You place an order during the trading day, and at 4 p.m. you get whatever the NAV is at that moment.

An ETF, by contrast, trades on an exchange like a stock. Its price changes throughout the day as buyers and sellers make trades. That market price can be slightly higher or lower than the NAV — a gap called a premium or discount. If an ETF's NAV is $50 but it is trading at $50.15, it is trading at a premium. If it is trading at $49.85, it is at a discount. For most ETFs, especially large ones, this gap is tiny — a few cents. For small or unusual ETFs, the gap can be larger.

This matters mainly to active traders. A long-term investor who buys an ETF and holds it does not care whether the price was at a premium or discount on the day they bought — what matters is the NAV, because that is what the fund's actual holdings are worth. The premium or discount will likely close over time.

Why NAV changes day to day

NAV moves because the value of the investments inside the fund moves. If a fund holds 100 stocks and 50 of them go up in value while 30 go down and 20 stay flat, the total value of the fund's holdings changes. Divide that new total by the number of shares, and you get a new NAV.

NAV also changes when the fund pays a dividend or makes a distribution. When a fund distributes cash to shareholders, the cash leaves the fund, so the NAV drops by the amount of the distribution per share. This is not a loss — you receive the cash — but it shows up as a decline in NAV on the day the distribution is paid.

Expenses and fees also reduce NAV over time. Every day, the fund deducts a small portion of its assets to cover operating costs and management fees. This is why a fund's NAV tends to lag behind the performance of the index it tracks, even if the fund holds the exact same stocks as the index.

Where to find a fund's NAV

The fund company itself publishes NAV on its website, usually updated after 4 p.m. Eastern time on trading days. Vanguard, Fidelity, Schwab, and other major fund providers list NAV for all their funds in the fund details or fact sheet.

Your brokerage account also shows NAV if you own the fund. Log in and look at your holdings — the price listed is the NAV (for mutual funds) or the current market price (for ETFs). Financial data websites like Yahoo Finance, Morningstar, and Google Finance also display NAV for any fund you search for.

Historical NAV data is useful if you want to track how a fund has performed over time. Most fund company websites let you download historical NAV data, and Morningstar provides detailed performance charts that show NAV changes alongside market benchmarks.

NAV and fund performance

NAV by itself does not tell you whether a fund is performing well or poorly. A high NAV does not mean a fund is better than a low NAV — a fund with a $150 NAV is not automatically better than one with a $30 NAV. What matters is how much the NAV has grown over time.

To measure performance, look at the fund's total return, which accounts for both NAV growth and dividends or distributions paid out. If a fund's NAV was $50 a year ago and is $52 today, and it paid $1 in dividends during that year, the total return is 6 percent — the $2 gain plus the $1 dividend, divided by the starting $50.

When comparing two funds, compare their total returns over the same time period, not their NAVs. A fund that started at $10 per share and is now $12 has the same 20 percent return as a fund that started at $100 and is now $120, even though the NAVs look very different.

NAV and taxes

NAV affects the cost basis you use for tax purposes when you sell fund shares. Your cost basis is what you paid for the shares, which is the NAV on the day you bought them. When you sell, the difference between the sale price (also the NAV on the sale day) and your cost basis is your gain or loss.

If you bought a fund at a NAV of $40 per share and sold it at a NAV of $45 per share, you have a $5 per share gain. That gain is taxable in the year you sell, unless the fund is in a tax-advantaged account like an IRA or 401(k).

Some funds allow you to choose which shares you sell — a method called specific identification. This lets you sell the shares with the highest cost basis first, reducing your taxable gain. Your broker or fund company can help you track which NAV you paid for each batch of shares you bought.

Frequently Asked Questions

Does a higher NAV mean a fund is more expensive?

No. NAV is just a price per share and does not indicate value. A fund with a $200 NAV is not more expensive than one with a $50 NAV. What matters is the fund's expense ratio — the annual percentage you pay in fees — and its performance relative to similar funds.

Can NAV go negative?

In theory, yes, but it is extremely rare. NAV would go negative only if a fund's liabilities exceeded its assets — meaning the fund owes more money than its investments are worth. This almost never happens because fund managers and regulators prevent it. If a fund faces serious trouble, it is closed and liquidated before NAV turns negative.

Why is my ETF's price different from its NAV?

ETFs trade like stocks throughout the day, so their market price can drift slightly above or below the NAV. This gap, called a premium or discount, usually closes quickly because traders profit by buying the cheaper version and selling the more expensive one. For most ETFs, the gap is less than a few cents.

If I buy a mutual fund at 3 p.m., what price do I pay?

You pay the NAV calculated at 4 p.m. that day, not the NAV from the previous day. All mutual fund orders placed during the trading day are filled at that day's closing NAV. This is different from stocks, where you get the price you see when you place the order.

How often does NAV update?

Mutual fund NAV updates once per day, after the stock market closes at 4 p.m. Eastern time on trading days. ETF prices update throughout the trading day like stock prices. You can see an ETF's NAV (the value of its holdings) separately from its market price on most financial websites.