Net asset value

Net asset value (NAV) refers to a measure of the current dollar value of one share of mutual fund. It is the fund's assets after deducting the liabilities and then dividing it by the number of outstanding shares. Net asset value is calculated every day. For a share holder, the increase in the net asset value means the increase in the value of his holdings.

NAV is in simple terms used to describe the value of an organization's assets after deducting its liabilities. The term is also often used in collective investment schemes. Net asset value also helps the investors to assess the growth prospects of their investing company.

They can simply compare the current market capitalization of the company with its net asset value. The net asset value of an open -end fund is said to be always equal its price. But this is not the case with the net asset value of a closed-end fund.

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