Definition
What is Net Asset Value (NAV)?
The total value of a fund's assets minus liabilities, typically expressed per unit (unit NAV) to determine the price at which investors subscribe or redeem.
Net Asset Value (NAV) is the fundamental accounting measure of a fund's worth — the sum of all assets at fair value minus all liabilities. NAV per unit determines the price at which investors subscribe to or redeem from open-ended funds.
Calculation: - NAV = Total Assets - Total Liabilities. - NAV per Unit = NAV / Number of Units on Issue.
For listed holdings: asset values are clear — market price at the close of trading on the relevant exchange.
For unlisted holdings: asset values require valuation methodology: - Recent transaction — if the asset (or a comparable asset) traded recently, that transaction price is the starting point. - Comparable-company analysis — for equity holdings, multiples (P/E, EV/EBITDA) applied to comparable listed companies. - Discounted cash flow (DCF) — projected future cash flows discounted at an appropriate rate. - Cost basis — for very recent investments (within 12 months), often the original cost is the best estimate.
Pricing frequency: - KiwiSaver: daily NAV. - Listed funds (REITs, listed PE): daily market price; NAV calculated monthly. - Open-ended wholesale managed funds: typically monthly or quarterly NAV with corresponding subscription/redemption windows. - Closed-end PE/VC funds: quarterly NAV per LP reporting.
Important distinction: - NAV per unit is what the fund's manager calculates. - Market price is what units actually trade at (for listed funds) or what subscribers/redeemers pay (for open-ended funds — typically equal to NAV at pricing date, possibly adjusted for entry/exit spreads).
Fair value vs cost: modern accounting standards (NZ IFRS) require NAV to be calculated at fair value, not historical cost. For property funds this means independent valuations on a rolling basis (typically every 6-12 months) rather than purchase price.
Why investors care about NAV trajectory: declining NAV signals portfolio impairments; rising NAV signals portfolio growth. A flat NAV in a rising market may suggest the manager is being conservative; a flat NAV in a falling market may suggest the manager hasn't yet marked impairments. Comparing NAV moves to public-market benchmarks is one input to manager evaluation.
Wholesale Investor NZ usage: NAV trajectory across NZ wholesale funds is not currently published — ROADMAP #21 (historical returns DB) would build this surface from quarterly NAV/return data provided by managers.
Related Terms
Open-Ended Fund
A fund that continuously accepts new subscriptions and redemptions, typically with periodic (monthly, quarterly) pricing and liquidity windows.
Unit Trust
A common fund structure under the FMCA where investors hold units representing a proportionate interest in the trust assets, held by a supervisor on the investors' behalf.
Managed Investment Scheme (MIS)
A collective investment vehicle where investor funds are pooled and managed by a professional manager.
Educational Content Disclaimer
This glossary provides general educational information only and does not constitute financial, legal, or tax advice. Definitions and explanations are simplified for educational purposes and may not cover all aspects or nuances of each term.
Before making any investment decision, you should seek independent advice from appropriately qualified professionals. Wholesale Investor does not recommend or endorse any particular investment, strategy, or fund manager.