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What is NAV a Measure of?

The net asset value of a fund describes the market value of the fund. It’s not the only measure to consider when assessing an investment’s value, but it’s an important one to understand.

Romina Maurino: You know you keep sort of talking about funds, so are we talking like mutual funds, ETFs, like what is NAV a measure of?

Raj Vijh: : It says the market value. I’m really referring to any pooled product when a bunch of investors get their money and pool them into one bucket and that is a fund. It can be a mutual fund, and an ETF is essentially that as well. So a NAV is the market value of that fund and a NAV per unit is a market value divided by the number of units. So I may have ten units and another investor may have a hundred units; it depends on how much money we put in. So the NAV per unit is the share price, if you like, a unit price, and the NAV of the fund is the total market value. So a fund may be a hundred dollars: You may have a hundred investors who put a hundred – a dollar each – and if you have a hundred units then the NAV per unit is one dollar and there’s a hundred units so it’s a hundred dollars’ worth in total.