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Net Asset Value (NAV) | How to Calculate?

Net Asset Value (NAV) | How to Calculate?

NAV or Net Asset Value represents the market value per share for a particular mutual fund. It is calculated by deducting the liabilities from the total asset value divided by the number of shares.

For companies and business entities, the difference between the assets and the liabilities is known as the net assets or the net worth or the capital of the company.

The term NAV is applied to the fund valuation and pricing, which is arrived at by dividing the difference between assets and liabilities by the number of shares held by the investors.

The fund’s NAV represents a “per-share” value of the fund, which makes it easier to be used for valuing and transacting the fund shares.

Key Points:

Net asset value is the value of a fund’s assets minus any liabilities and expenses.

The NAV (on a per-share basis) represents the price at which investors can buy or sell units of the fund.

When the value of the securities in the fund increases, the NAV increases.

When the value of the securities in the fund decreases, the NAV decreases.

The NAV number alone offers no insight as to how “good” or “bad” the fund is.

The NAV of a fund should be looked at over a timeframe to assess fund performance.

How Net Asset Value is Calculated?

The calculation of the net value is pretty straightforward. One can easily do it by using the formula below–

 Net Asset Value Formula:

 (Total assets – total liabilities) / total outstanding shares


  • The value of assets is the value of all the securities in the portfolio
  • Value of liabilities is the value of all liabilities and fund expenses (such as staff salaries, management expenses, operational expenses, audit fees, etc.)

Role/ Importance of NAV

Most investors believe the net value of an asset is the same as its stock price. Thus, they tend to think that funds with a lower net asset value are cheaper and consequently better investments.

However, the NAV calculation does not correlate with the fund’s performance. Just because a fund has a lower net value does not make it a comprehensive investment.

The net value of an asset merely illustrates how the underlying assets have performed in the previous years.

Therefore, investors should not make it a deciding parameter while choosing funds to invest in. They should check the returns from their investments to make an informed decision.

Thus, the net value of an asset is useful when it comes to understanding how a fund performs every day. It does not indicate how lucrative a fund is. Therefore, investors should check the current cost of funds and their historical performance before choosing to invest in it.


NAV is the net value of an investment fund’s assets less its liabilities, divided by the number of shares outstanding. Funds can be opened or closed and the pricing of each share is based on NAV. The price of each fund share is reflected as the NAVPS or per-share value.


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