Net Asset Value Formula (Table of Contents)
Net Asset Value Formula
source: hdfcfund.com
If you have ever invested in mutual funds, you will repeatedly hear one term. It is NAV. The full form of NAV is Net Asset Value. It is actually the difference between the assets and the liabilities.
Let’s have a look at the formula of net asset value.
Example of Net Asset Value Formula
Let’s take a simple example.
Onus Fund has the following information. You need to find the NAV of this fund –
 Market Value of Securities held by the fund – $450,000
 Cash & Equivalent Holdings – $50,000
 Liabilities of the funds – $200,000
 Number of Outstanding Shares – 10,000
By using the formula of NAV, we get –
 Net Asset Value = (Market Value of Securities Held by the mutual/closeend fund + Cash & Equivalent Holdings – Liabilities of the fund)/Number of Outstanding Shares
 Or, = ($450,000 + $50,000 – $200,000) / 10,000
 Or, = $300,000 / 10,000 = $30 per share.
Explanation of Net Asset Value Formula
 In net asset value formula, we first need to find the market value of the shares.
 To find out the market value of the shares held by the fund, we need to apply a formula –
 The market value of the shares = Market price per share * Number of outstanding shares
 If the market price per share is $10 per share and the number of outstanding shares is 1000, then the market value of the shares would be = ($10 * 1000) = $10,000.
 The second component of the formula is cash and equivalent holdings. We will add this item because it is an asset.
 The third component of the formula is the liabilities of the fund.
 To find out the actual value of a fund, we need to look at the difference between the total assets and the total liabilities.
 Finally, we need to divide the difference by the number of outstanding shares to get NAV per share.
Use of Net Asset Value Formula
Let’s say that you would like to invest in a mutual fund. What would you look for?
Many financial analysts argue that it is wiser to look at NAV rather than looking at the individual market price of the share. Here’s why.
 They think that when you look at NAV of funds, you get the misconception that NAV dictates the future benefit of the fund. This according to them is utterly false.
 That’s why these financial analysts mention that you should look for the quality of funds and not the NAV. Yes, NAV is important, but as an investor, you shouldn’t put too much faith in the higher or lower NAV because that doesn’t make any difference in how much return the portfolio under the fund would generate.
 If you want to take the advantage of higher returns, select industries that have been growing much faster than the other industries. Let’s say if you choose to invest in IT industry instead of other industries, you will be able to generate much higher returns on your investments.
Net Asset Value Calculator
You can use the following NAV Calculator.
Market value of Securities Held by the Fund  
Cash & Equivalent Holdings  
Liabilities of the Fund  
Number of Outstanding Shares  
Net Asset Value Formula =  
Net Asset Value Formula = 



Net Asset Value Formula in Excel (with excel template)
Let us now do the same example above in Excel.
This is very simple. You need to provide the Four inputs of Market Value of Securities held by the fund, Cash & Equivalent Holdings, Liabilities of the fund’s Number of Outstanding Shares.
You can easily calculate the net asset value in the template provided.
You can download this net asset value template here – Net Asset Value Excel Template
Recommended Articles:
This has been a guide to NAV Formula, practical examples, and Net Asset Value calculator along with excel templates. You may also have a look at these articles below to learn more about Financial Analysis
 Net Present Value Formula
 Top 5 Types of Mutual Funds
 What is Mutual Fund?
 ETF vs Index Funds  Top 8 Differences
Leave a Reply