NAV

Net Asset Value (NAV) is a crucial concept in the world of investing, particularly for those interested in mutual funds and exchange-traded funds (ETFs). It serves as a key indicator of the fund’s performance and is instrumental in determining its price and returns. Let’s delve into the significance of NAV and how it influences the prices and returns of mutual funds and ETFs. What is Net Asset Value (NAV)? Net Asset Value, commonly referred to as NAV, represents the per-share value of a mutual fund or an ETF. It is calculated by dividing the total value of the fund’s assets by the number of outstanding shares. Essentially, NAV illustrates the fund’s intrinsic value and reflects the collective value of all the securities held in the fund’s portfolio, after accounting for expenses and liabilities. How is NAV Calculated? To calculate the NAV of a fund, the following steps are typically followed: 1. Valuation of Assets The fund manager assesses the value of all the securities held in the fund’s portfolio. This includes stocks, bonds, cash, and any other investments. 2. Deduction of Liabilities The fund’s liabilities,