Net asset value (NAV)

Author:

Taylor Cook

Read time:

1 minute

Published date:

October 30, 2024

Net asset value (NAV) is a key financial metric used to evaluate investment fund performance. In this article, we'll explain what NAV is and how to calculate it.

What is NAV?

The net asset value (NAV) of an investment is a calculation of the asset’s value after investment costs—such as the initial capital outlay and any associated fees—have been subtracted from the present value of the investment.

Fund managers can use benchmarks and trends like NAV to evaluate their portfolio strategies and make informed decisions.

Net asset value formula

The formula to calculate NAV is:

NAV = (Assets – Liabilities) / Number of Outstanding Shares

Assets

The total value of a fund’s assets should include all assets within a fund’s portfolio, including:

• Stocks
• Bonds
• Cash equivalents

A fund’s assets are often valued by using the market price for publicly traded securities.

Liabilities

The total liabilities for a fund includes:

• Expenses
• Management fees
• Operational costs

Outstanding shares

The total number of outstanding shares are the shares held by all investors in the fund. The number of outstanding shares can change daily, which in turn impacts the NAV.

Author: Taylor Cook

Taylor Cook is a valuations manager on Carta's Auditable Reporting team. He holds a Master of Science (M.Sc.) in Financial Analysis.