Net asset value
From Wikipedia, the free encyclopedia
The Net Asset Value is a term used to describe the value of an entity's assets less the value of its liabilities. The term is commonly used in relation to collective investment schemes. It may also be used as a synonym for the book value of a firm.
For collective investments (mutual funds), net asset value is the total value of the fund's portfolio less liabilities. The NAV is usually calculated on a daily basis.
For corporations, net asset value is the value of assets less liabilities.
For the value of assets and value of liabilities, different definitions are used depending upon the circumstances, purposes or regulations that may apply. For mutual funds, for example, the most common value definition is the market value. Other variations can include:
- Book value
- Carrying value
- Historical cost
- Amortised cost
- Market value
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[edit] Usage
Investors might want to know if a company is cheap or expensive to invest in. One possibility is to compare its current market capitalization with its net asset value - since, all things being equal, one might expect them to be the same. There are reasons why this might not be true.
- NAV covers the company's current asset and liability position. Investors might expect the company to have large growth prospects, in which case they would be prepared to pay more for the company than the NAV suggests.
- The NAV is usually below the market price because the current value of the fund's assets are higher than the historical financial statements used in the NAV calculation. But in the case of, for example, Liberty Media Corporation, analysts and management have estimated that it is actually trading for 30-50% below its net asset value (or "core asset value").[citation needed]
The NAV of an open-end fund will always equal its price. But the price of a closed-end fund may not equal its NAV as closed-end funds are traded in the secondary market and the above reasons cause price to vary from NAV (premium or discount applied).
[edit] See also
[edit] References
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[edit] External links
Investment management | |
|---|---|
| Collective investment schemes | Common contractual funds • Fonds commun de placements • Investment trusts • Hedge funds • Unit trusts • Mutual funds • ICVC • SICAV • Unit Investment Trusts • Exchange-traded funds • Offshore fund • Unitised insurance fund |
| Styles and theory | Active management • Passive management • Index fund • Efficient market hypothesis • Socially responsible investing • Net asset value |
| Related Topics | List of asset management firms • Umbrella fund • Fund of funds • UCITS |
ru:Стоимость чистых активов
