Net asset value (NAV) is one of the core financial metrics that private fund managers in private equity, venture capital, and hedge funds use to evaluate their investment performance and overall fund value.
What is NAV?
The net asset value (NAV) of an investment is a calculation of the asset’s value after investment costs—such as the initial capital outlay and any associated fees—have been subtracted from the present value of the investment.
Fund managers can use benchmarks and trends like NAV to evaluate their portfolio strategies and make informed decisions.
Net asset value formula
The formula to calculate NAV is:
NAV = (Assets – Liabilities) / Number of Outstanding Shares
Assets
The total value of a fund’s assets should include all assets within a fund’s portfolio, including:
-
Stocks
-
Bonds
-
Cash equivalents
A fund’s assets are often valued by using the market price for publicly traded securities.
Liabilities
The total liabilities for a fund includes:
-
Expenses
-
Management fees
-
Operational costs
Outstanding shares
The total number of outstanding shares are the shares held by all investors in the fund. The number of outstanding shares can change daily, which in turn impacts the NAV.
DISCLOSURE: This communication is on behalf of eShares, Inc. dba Carta, Inc. ("Carta"). This communication is for informational purposes only, and contains general information only. Carta is not, by means of this communication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services nor should it be used as a basis for any decision or action that may affect your business or interests. Before making any decision or taking any action that may affect your business or interests, you should consult a qualified professional advisor. This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. Carta does not assume any liability for reliance on the information provided herein. © 2024 Carta. All rights reserved. Reproduction prohibited.
