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Information about Net Asset Value

The Net Asset Value or NAV is a term used to describe the value of an entity's assets the value of its liabilities. The term is commonly used in relation to collective investment schemes. It may also be used as a synonym for the book value of a firm.

For collective investments (mutual funds), net asset value is the total value of the fund's portfolio less liabilities. The NAV is usually calculated on a daily basis.

For corporations, net asset value is the value of assets less liabilities.

For the value of assets and value of liabilities, different definitions are used depending upon the circumstances, purposes or regulations that may apply. For mutual funds, for example, the most common value definition is the market value. Other variations can include:

Usage

Investors might want to know if a company is cheap or expensive to invest in. One possibility is to compare its current market capitalization with its net asset value - since, all things being equal, one might expect them to be the same. There are reasons why this might not be true.
  • NAV covers the company's current asset and liability position. Investors might expect the company to have large growth prospects, in which case they would be prepared to pay more for the company than the NAV suggests.
  • The NAV is usually below the market price because the current value of the fund's assets are higher than the historical financial statements used in the NAV calculation. But in the case of, for example, Liberty Media Corporation, analysts and management have estimated that it is actually trading for 30-50% below its net asset value (or "core asset value").
The NAV of an open-end fund will always equal its price. But the price of a closed-end fund may not equal its NAV as closed-end funds are traded in the secondary market and the above reasons cause price to vary from NAV (premium or discount applied).

See also

References

External links



Investment management
Collective investment schemes:  Common contractual funds • Fonds commun de placements • Investment trusts • Hedge funds • Unit trusts • Mutual funds • ICVC • SICAV • Unit Investment Trusts • Exchange-traded funds • Offshore fund • Unitised insurance fund
Styles and theory:  Active management • Passive management • Index fund • Efficient market hypothesis • Socially responsible investing • Net asset value
Related Topics: List of asset management firms • Umbrella fund • Fund of funds • UCITS

A collective investment scheme is a way of investing money with other people to participate in a wider range of investments than may be feasible for an individual investor and to share the costs of doing so.
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In accounting, book value or carrying value is the value of an asset or liability according to its balance sheet account balance. Book value is the value carried on the bookkeeping records of an economic entity such as an individual, corporation, government, or other
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A collective investment scheme is a way of investing money with other people to participate in a wider range of investments than may be feasible for an individual investor and to share the costs of doing so.
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mutual fund is a professionally-managed form of collective investments that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities.
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liability is anything that is a hindrance, or puts individuals at a disadvantage.

Financial accounting

In financial accounting, a liability is defined as an obligation of an entity arising from past
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asset is meant probable future economic benefits controlled by an entity as a result of past transactions or events and from which future economic benefits may be obtained.
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liability is anything that is a hindrance, or puts individuals at a disadvantage.

Financial accounting

In financial accounting, a liability is defined as an obligation of an entity arising from past
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In accounting, book value or carrying value is the value of an asset or liability according to its balance sheet account balance. Book value is the value carried on the bookkeeping records of an economic entity such as an individual, corporation, government, or other
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In accounting and finance, the carrying value or carry value of an asset is the amount reported as the asset's current nominal "worth" for accounting purposes. It is also called the book value of an asset (although book value may also be used to refer to the shareholders'
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In historical cost accounting, historical cost is the original monetary value of an economic item.

Depreciation effects the carrying value of an asset on the balance sheet.
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Market Value is the price at which an asset would trade in a competitive Walrasian auction setting. Market Value is usually interchangeable with Open Market Value or Fair Value.
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Market capitalization, or market cap, is a measurement of corporate or economic size equal to the share price times the number of shares outstanding of a public company.
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Financial statements (or financial reports) are formal records of a business' financial activities. These statements provide an overview of a business' profitability and financial condition in both short and long term.
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The Liberty Media Corporation is an American media conglomerate and the control is exercised by engineer Dr. John Malone, with a majority of the voting shares. In May 2006, Liberty shareholders approved the creation of four new tracking stocks, two classes for each of Liberty's two
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Net assets are sometimes the same as net worth, or shareholders' equity - assets minus liabilities. In "Return On Net Assets" (RONA) it's often fixed assets plus net working capital (current assets minus current liabilities), which may be slightly less than total assets.
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A collective investment scheme is a way of investing money with other people to participate in a wider range of investments than may be feasible for an individual investor and to share the costs of doing so.
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mutual fund is a professionally-managed form of collective investments that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities.
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Investment management is the professional management of various securities (shares, bonds etc) assets (e.g. real estate), to meet specified investment goals for the benefit of the investors. Investors may be institutions (insurance companies, pension funds, corporations etc.
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A collective investment scheme is a way of investing money with other people to participate in a wider range of investments than may be feasible for an individual investor and to share the costs of doing so.
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common contractual fund (or “CCF”).

The CCF is an unincorporated body established by a management company under which the participants by contractual arrangements participate and share in the property of the fund as co-owners (specifically tenants in common).
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Fonds commun de placement translates to "Pooled funds", and are open-ended collective investment funds based that are neither trust of company law based. They are similar to Common contractual funds in Ireland.

Commonly referred to as FCP or F.C.P.
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Investment trusts are companies that invest in the shares of other companies for the purpose of acting as a collective investment.

Investors' money is pooled together from the sale of a fixed number of shares a trust issues when it launches.
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A hedge fund is an investment fund structured to avoid direct regulation and taxation in major host countries and which charges a performance fee based on the increase of the value of the fund's assets.
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For UIT, a U.S. fund type, see .
A unit trust is a form of collective investment constituted under a trust deed.

Found in the UK, Ireland, Australia, New Zealand, South Africa and British Isles offshore jurisdictions, unit trusts offer access to
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mutual fund is a professionally-managed form of collective investments that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities.
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An ICVC or Investment Company with Variable Capital is a type of open ended collective investment formed as a corporation under the Open-Ended Investment Companies Regulations of the United Kingdom.
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A SICAV is an open-ended collective investment scheme common in Western Europe especially Luxembourg, Switzerland, Italy and France. SICAV is an acronym for Société d'investissement à capital variable which can be translated as
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For the UK fund type, see .
A Unit Investment Trust (UIT) is a US investment company offering a fixed (unmanaged) portfolio of securities having a definite life. UITs are assembled by a sponsor and sold through brokers to investors.
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Exchange-traded funds (or ETFs) are Open Ended investment companies that can be traded at any time throughout the course of the day. Typically, ETFs try to replicate a stock market index such as the S&P 500 (e.g.
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An offshore fund is a collective investment scheme domiciled in an Offshore Financial Centre, for example British Virgin Islands, Luxembourg, Cayman Islands or Dublin. For the purposes of the Income and Corporation Taxes Act 1988 of the UK, an offshore fund is one which is governed
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