NAV — what is Net Asset Value?

Definition

NAV (Net Asset Value) is the net asset value of an investment fund, calculated as the sum of all fund assets minus liabilities, divided by the number of units issued.

Quick Answer

NAV (Net Asset Value) is the net value of an investment fund, calculated as fund assets minus liabilities, divided by the number of units. In traditional TFI funds, NAV is struck once per day after the session and is the price at which you buy and sell. In ETFs, an indicative iNAV runs through the day and the market price may slightly deviate from NAV as a premium or discount — usually below 0.1% for large, liquid ETFs thanks to arbitrage. NAV underpins unit valuation and return calculations.

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Formula

NAV = (Fund assets - Liabilities) ÷ Number of units

How does it work in practice?

Let's say a fund has:

• Stocks worth 100 million PLN
• Bonds worth 50 million PLN
• Cash: 10 million PLN
• Liabilities: 2 million PLN
• Number of units: 1 million

NAV = (160 million - 2 million) ÷ 1 million = 158 PLN per unit

NAV in traditional funds vs ETFs

Traditional funds (TFI)

• NAV calculated once per day (after session close)
• You buy/sell always at NAV from the order day
• Price = NAV

ETFs

• NAV calculated during the day (iNAV — indicative NAV)
• Market price of ETF may slightly deviate from NAV
• The difference (premium/discount) is usually minimal (<0.1%) thanks to arbitrage mechanism

Why is NAV important?

• Allows you to assess whether an ETF is trading at a premium or discount
• Used to calculate fund returns
• Serves as the basis for unit valuation when buying/selling traditional funds

Premium and discount

• ETF trades at premium (price > NAV) — investors want to buy more than there are assets
• ETF trades at discount (price < NAV) — the opposite

With large, liquid ETFs, the difference is negligible. With niche ETFs from exotic markets — it can be larger.

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FAQ

What does NAV actually stand for?

NAV stands for Net Asset Value. It represents the per-unit value of an investment fund, calculated as total assets minus total liabilities divided by the number of outstanding units or shares.

How often is NAV calculated?

Traditional mutual funds typically calculate NAV once per day after market close. ETFs publish an indicative NAV (iNAV) throughout the trading day, while the official NAV is also struck at the end of the session.

Why does an ETF's market price sometimes differ from its NAV?

Supply and demand on the exchange can push the market price slightly above NAV (premium) or below NAV (discount). For large, liquid ETFs the deviation is usually below 0.1% thanks to authorized participants arbitraging the difference.

Is buying an ETF at a premium always bad?

Not necessarily, but it means you're paying slightly more than the underlying assets are worth at that moment. For long-term investors the impact is typically small; for niche or emerging-market ETFs the spread can be wider and worth checking before placing an order.

Can I use NAV to compare two different funds?

NAV alone is not a quality metric — a high or low NAV doesn't say anything about returns. Comparisons should use total return, TER, and tracking difference. NAV is mainly useful for valuing your own holdings and detecting premium/discount situations.