NAV Calculator (Net Asset Value)

NAV per share = (Total Assets - Total Liabilities) / Shares Outstanding. It is the per-share value of a fund’s underlying holdings. The base for mutual fund pricing, ETF arbitrage mechanics, and closed-end fund (CEF) premium / discount math.

The formula in detail:

NAV per share = (Σ Market Value of Holdings - Liabilities) / Shares Outstanding

For a typical equity mutual fund:

• Total Assets: market value of all stocks + cash
• Liabilities: redemptions pending, expense accruals, leverage if any
• Shares Outstanding: total fund shares held by investors

How NAV is calculated daily for mutual funds. Open-end mutual funds calculate NAV once per day, after market close (4:00 PM Eastern). All buy and sell orders received that day execute at this single NAV. The pricing process:

1. Mark all holdings to closing market prices
2. Add cash, accrued income, recoverable taxes
3. Subtract accrued expenses, dividends payable, redemption obligations
4. Divide by shares outstanding

This is why mutual fund prices change once per day — and why orders placed at 3:55 PM execute at the same NAV as orders at 9:30 AM that morning (assuming both reach the fund company before the cutoff).

ETFs trade at market price, not NAV directly. ETF shares trade on exchanges throughout the day at market prices that may differ slightly from the underlying NAV. Authorized Participants (APs) arbitrage these gaps:

• ETF trades at premium to NAV: AP creates new shares (buys underlying basket, gives to fund, receives ETF shares to sell at premium) → drives ETF price down toward NAV
• ETF trades at discount: AP redeems shares (buys ETF shares cheap, gives to fund, receives underlying basket worth more) → drives ETF price up toward NAV

This creation/redemption mechanism keeps liquid ETF prices within a few cents of NAV. Less liquid ETFs (small or thinly traded) can trade with larger NAV gaps.

Closed-end funds trade at premium or discount to NAV — sometimes for years. Unlike open-end funds, CEFs have a fixed share count. Investors must trade with each other on the exchange. Persistent discounts of 10-15% are common, especially in certain sectors:

• Investment grade muni CEFs: typically 5-15% discount
• High-yield bond CEFs: variable
• Equity CEFs: 5-12% discount common
• Recently IPO’d CEFs: often trade at premium initially, then drift to discount

REIT NAV is more complex. A REIT’s reported NAV often differs from book value because:

• Real estate is held at depreciated cost on balance sheet, not fair value
• Sell-side analysts model “NAV per share” using cap rates applied to property NOI
• Public REITs may trade at 10% premium or 30% discount to analyst NAV depending on market sentiment

If you compare a REIT’s stock price to its analyst NAV estimate:

• Premium to NAV: market expects portfolio growth or asset appreciation
• Discount to NAV: market doubts portfolio quality or growth path

BDCs (business development companies) report NAV quarterly. BDCs hold private credit and equity in middle-market companies. NAV reflects management’s fair-value estimates of these illiquid holdings. BDC stocks often trade at premium or discount to NAV depending on:

• Earnings yield (dividend / price)
• Credit cycle (BDCs trade at NAV discount during recessions)
• Manager track record

Worked example. A mutual fund at year-end:

• Stock holdings market value: $480M
• Cash: $20M
• Total assets: $500M
• Accrued expenses: $1M
• Other liabilities: $0
• Shares outstanding: 25M

NAV per share = (500 - 1) / 25 = $499 / 25 = $19.96

Investors buying or selling that day pay or receive $19.96 per share.

The “stale price” risk. When a fund holds illiquid securities (foreign stocks during US market hours, private credit), NAV may not reflect true current value. This creates arbitrage opportunities — fair-value pricing rules force funds to estimate fair values for stale prices, but the rules are imperfect. Frequent traders sometimes exploit this gap; mutual funds use redemption fees and short-term trading restrictions to discourage it.

NAV vs market cap. They are similar concepts but for different vehicles:

• NAV: for funds (open-end, closed-end, ETF, BDC, REIT analyst estimates)
• Market cap: for individual companies (stock price × shares outstanding)

NAV is bottom-up (sum of holdings); market cap is top-down (what the market values the whole entity at).