Net Asset Value Definition

Net asset value (NAV) is the market value of a mutual fund’s or other investment product’s assets, minus liabilities. The NAV is calculated once a day, after the markets close.

The NAV is important because it is the price at which an investor buys or redeems shares in a mutual fund. All else being equal, the lower the NAV, the better for investors, because they pay less per share. But NAV isn’t everything; investors also need to consider a fund’s performance and expense ratio.

To calculate a fund’s NAV, you take the total value of all the securities in the portfolio, including cash and investments in money market instruments and subtract any liabilities. This gives you the net asset value of the fund. Then, you divide this number by the number of shares outstanding to get the per-share NAV.