For the case of companies, my understanding is that the NAV (net asset value) is all its assets minus its liabilities. Then, this value is divided by the total number of shares the company has issued and that gives the NAV per share. On the other hand, the market price of a share is the price to which it trades, which we could say incorporates factors as confidence and expected potential gains. Therefore we can conclude that the market price is way more volatile than the actual NAV, due to these 'psychological factors'. (please correct me if I'm wrong)

However, according to this investopedia article, a mutual fund's NAV is directly its per-share market value. Then, the concept of NAV is very different in the case of stock shares and mutual fund shares, since the latter is not based in pure physical assets and liabilities, but already incorporates the volatility of market prices. Have I understood it correctly?

1 Answer 1


Well, it's true, but a little misleading. Mutual funds always "trade" at the net value of all of the stocks it holds (less any liabilities and expenses) at the end of each day.

NAV for a company can change daily as well as its assets and liabilities fluctuate, but it usually is only measured quarterly (at least externally; some companies do an internal balance sheet monthly or even more frequent).

ETFs trade throughout the day, but the price paid is still driven by the value of its assets — any discrepancy in market price and NAV is gobbled up quickly by the Authorized Participant (AP) of the ETF.

So the concept is the same, but the underlying assets and liabilities are different.

  • > [...] at the net value of all of the stocks it holds (less any liabilities and expenses) at the end of each day.[...] -- The liabilities of a mutual fund affect to its NAV per share? For instance, if a fund has issued some sort of bond to perform margin operations, that liability decreases the funds' NAV per share?
    – Martel
    May 19, 2020 at 12:37
  • Well, technically, yes, but mutual funds don't typically have much (if any) debt - they are funded by the purchase of units, so there's not much need to incur debt.
    – D Stanley
    May 19, 2020 at 12:42

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