Net asset value
Assets less liabilities, per share or unit. Open-end funds deal at it; shares traded on an exchange, such as a closed-end fund's, can sit at a premium or discount to it.
Where you will meet it
Net asset value appears in 12 learning outcomes on the CFA syllabus. A few of them:
- Explain mutual funds and how they differ from other pooled investment vehicles
“An open-end fund issues and redeems shares at net asset value, which is assets minus liabilities divided by shares outstanding, calculated at the end of each day.”
- Set out the vehicles for investing in digital assets and the risks they carry
“Futures-based funds suffer roll costs that make returns diverge from the spot price; trusts without a redemption mechanism can trade at large premiums or discounts to net asset value; and company shares add business and equity-market risk.”
- Set out why an ETF can trade above or below its NAV
“An ETF's premium or discount is its market price minus its net asset value per share, expressed as a percentage of NAV.”
- Argue why NAVPS, the net asset value per share, suits the valuation of listed real estate securities, and use forecast cash net operating income to estimate it
“Net asset value per share estimates what a REIT's properties and other assets would fetch, less its liabilities, per share.”
See also
Practise it
Practise net asset value until it is automatic: questions that explain every wrong option.
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