NAV (net asset value)

The net asset value (NAV) is the actual intrinsic value of a fund or ETF share.

Calculation:

NAV = (total value of all securities + cash − liabilities) ÷ number of shares issued

Example:

• An ETF holds shares worth 1 billion euros
• Plus 50 million in cash, minus 10 million in liabilities
• 10 million shares issued
• NAV = (1,000 + 50 − 10) ÷ 10 = €104 per share

NAV for ETFs vs. active funds:

Active funds:

• NAV is calculated once a day (end-of-day price)
• Always bought/sold at NAV
• No trading during the day

ETFs:

• NAV is calculated continuously (iNAV = indicative NAV)
• The market price can deviate from the NAV (premium/discount)
• Market makers make sure the deviation stays minimal (typically 0.05%)
• Creation/redemption: large investors can create/redeem shares directly with the ETF provider – this keeps the price at NAV

When does the ETF price deviate from the NAV?

• Outside trading hours: a DAX ETF in the evening while the DAX exchange is closed
• Extreme market situations: during panics or flash crashes
• Illiquid ETFs: niche ETFs with little trading volume