Marketing Communication
The word NAV stands for Net Asset Value and is one of the main metrics used to analyze a fund profile.
What Exactly is the NAV?
This number is obtained by dividing the fund’s assets by the amount of outstanding shares. It thus represents the official value of a share of the fund, considering the assets that it holds in that moment. Its value tends to change as the assets’ value varies. The NAV can be calculated on a daily basis or even on smaller time intervals: in this case we talk about the intraday net asset value (iNAV). It is however the NAV that holds the function of the fund’s official accounting value.
NAV and ETF Share Price
Although the NAV and the ETF share price are usually very close, they can differ from time to time. Based on demand’s fluctuations, the ETF share price might differ from the official value of the fund’s shares. If demand is very high, the ETF shares might in fact be exchanged at a price higher than the NAV or at a premium. If the contrary occurs, they are said to be trading at a discount. Buying at a premium can be viewed as paying more than their official value.