What is NAV in securities?

NAV is one of the main indicators to evaluate the performance of investment funds.

NAV (Net Asset Value) means net asset value, calculated as total value of assets minus total value of liabilities.

For example, if a company has total assets of VND 100 billion and liabilities of VND 10 billion, it means that its NAV would be VND 90 billion.

Essentially, any business entity or financial product that deals with the accounting concepts of assets and liabilities can determine a NAV.

However, the NAV value is most commonly used for investment funds (open-ended funds and ETFs). In this case, NAV is determined by dividing the difference between assets and liabilities by the number of outstanding fund certificates.

NAV = (Total assets – Liabilities) / Total outstanding fund certificates

Accordingly, if an investment fund has total assets of VND 100 billion and liabilities of VND 30 billion and the number of outstanding fund certificates is 5 million units, the NAV of this investment fund is 14,000. copper.

Because the assets and liabilities of investment funds change from day to day, the NAV value always fluctuates. Most investment funds publish NAV changes on their websites daily and report periodically.

The NAV index helps investors see the performance of each investment fund. From there, determine whether the development of that fund has good growth or not.

Essentially, the price of the fund certificates of all funds is initially priced the same. They all have a par value of 10,000/fund certificates. Over time, the NAV of each fund will have different fluctuations. Therefore, NAV partly affects investors’ decision to choose funds.

On the other hand, it must be understood that only evaluating on NAV to select investment funds will not make much sense. Instead, investors should make a more general assessment from the operating history of each investment fund, the investment assets the fund is holding, the experience of the fund management, the future investment plan, etc. …

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