Finance: What is Net Asset Value (NAV)?

NAV isn't a cool new navigation app...it's how mutual fund shares are valued or priced at the end of each trading day.

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Transcript

00:25

the bid-ask spread ie the ask is the price at which somebody will sell these

00:29

shares are added up and yep totaled in this case there are a hundred fourteen

00:33

different names in the portfolio and seven million bucks in cash all of which

00:38

total eighty-two point three million dollars in value at the end of this day

00:41

well there are two million shares outstanding exactly at this moment so

00:47

the nav at today's close well it's eighty two point three million divided

00:51

by two million shares outstanding to get forty one dollars fifteen cents per

00:55

share that 4115 is the nav of the mutual fund and what happens when more

01:01

investors join by you know putting in cash well like let's say somebody

01:06

invests a million dollars at the end of today well then the fund goes from [money lining up in rows]

01:09

having seven million bucks in cash to having eight million bucks in cash and

01:14

that investor just bought 1 million / 4115 4 nav share self that mutual fund

01:21

company printed out of thin air an incremental twenty four thousand

01:25

three hundred one shares bringing its total the two million twenty four

01:28

thousand three hundred one the total value of the fund is now eighty three

01:32

point three million bucks up from yesterday's eighty two point three

01:35

million and the shares outstanding in the fund are now two million twenty four

01:40

thousand three hundred one and yeah the nav didn't change just the shares

01:43

outstanding and it's nav not not pronounced nav although it'd be kind of

01:50

a cool name for a mutual fund anything never like find where you're going nav [tiny red car on map]

01:55

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