Net Asset Value

Net Asset Value (NAV) is the complete value of an investment after expensing its liabilities from its assets. Morningstar uses NAV to reference the per-share price of a fund.

To calculate NAV, we take the total net assets of a fund (assets – liabilities) and divide it by the number of outstanding shares. The end value represents the per-share price at which the fund will trade.

NAV is not a proper representation of the performance or demand of a fund and is highly impacted by changes to its total net assets. NAV will grow if the fund received new money from investors. It can also be dragged down by the liabilities or expenses of the fund, such as having to pay capital gains as dividends to investors.

Morningstar analysts look more closely at a fund’s characteristics, beyond their NAV, when evaluating their performance.