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{{Short description|Net value of an entity calculated as total value of its assets minus value of liabilities}}
{{refimprove|date=April 2008}}
'''Net asset value''' ('''NAV''') is the value of an entity's [[asset]]s minus the value of its [[Liability (financial accounting)|liabilities]], often in relation to [[open-end fund|open-end]]
signed by President Dwight D. Eisenhower in 1960. This was as a result of its extensive use by Green Street Advisors in 1985.<ref>{{cite web |url=https://reitlog.com/news/reit-valuation-methods-unearthing-hidden-gems/ |title=REIT Valuation Methods: Unearthing Hidden Gems |website=Reitlog.com |date=15 November 2023 |access-date=19 June 2025}}</ref>
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Net asset value and other accounting and recordkeeping activities are the result of the process of [[fund accounting]] (also known as securities accounting, investment accounting, and portfolio accounting). Fund accounting systems are sophisticated computerized systems used to account for investor [[Financial capital|capital]] flows in and out of a fund, purchases and sales of investments, and related investment income, gains, losses and operating expenses of the fund. The fund's investments and other assets are valued regularly; daily, weekly, or monthly, depending on the fund and associated regulatory or sponsor requirements. There is no universal method or basis of [[valuation (finance)|valuing assets and liabilities]] for the purposes of calculating the net asset value used throughout the world, and the criteria used for the valuation will depend upon the circumstances, the purposes of the valuation, and any regulatory and/or accounting principles that may apply. For example, for U.S.-registered open-ended funds, investments are commonly valued each day the [[New York Stock Exchange]] is open, using closing prices (meant to represent fair value),<ref>AICPA Audit and Accounting Guide - Investment Companies May 1, 2007.</ref> typically 4:00 p.m. [[Eastern Time]]. For U.S.-registered money market funds, investments are often carried or valued at "amortized cost" as opposed to market value for expedience and other purposes, provided various requirements are continually met.<ref>{{cite web |title=A Guide To Understanding Mutual Funds |publisher= Investment Company Institute |url=http://www.ici.org/pdf/bro_understanding_mfs_p.pdf }}</ref> The Securities and Exchange Board of India issued a notice on 17th September 2020 stating that when purchasing mutual fund units before 1:00 PM the NAV from the day of realization (day when investment money reaches the AMC) will be applicable irrespective of the size of investment.
At the completion of the valuation process and once all other appropriate accounting entries are posted, the accounting books are "closed", enabling a variety of information to be calculated and produced including the net asset value per share.
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The valuation of the assets and liabilities of an open-ended fund is therefore very important to investors. If the NAV in the above example had, with the same assets, been calculated as $160 million (and the NAV per share as $160), the investor would have been given 250,000 shares and would become entitled to 1/5 of the fund's value.
In contrast, [[closed-end fund]]s are traded in the open market between investors, bought and
==Mismarking==
[[Mismarking]] in securities valuation takes place when the value that is assigned to securities does not reflect what the securities are actually worth, due to intentional [[fraudulent]] mispricing.<ref>[https://www.bis.org/bcbs/qisoprisknote.pdf "1QIS 2 - Operational Risk Loss Data – 4 May 2001,"] [[Bank of International Settlements]].</ref><ref name="auto3">{{Cite web|url=https://markets.businessinsider.com/news/stocks/morgan-stanley-fires-places-on-leave-four-traders-mismarking-securities-2019-11-1028727080|title=Morgan Stanley reportedly fires or places on leave at least 4 traders while investigating millions in hidden losses | Markets Insider|author=Daniel Strauss|date=November 29, 2019|website=Business Insider}}</ref><ref name="auto4">{{Cite web|url=https://www.aoinvestigationsinsight.com/amid-falling-markets-valuation-challenges-and-mis-marking-fraud-risks-rise/|author=Eugene Ingoglia
==Valuation of assets in open-ended funds and hedge funds==
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Calculation of the net asset value for a hedge fund, including the calculation of the fund's income and expense accruals and the pricing of securities at current market value, is a core [[fund administrator]] task, because it is the price at which investors buy and sell shares in the fund.<ref name=autogenerated2>[http://files.irishfunds.ie/1433105561-2009-9-guide-to-sound-practices-for-hedge-fund-administrators.pdf ''Guide to Sound Practices for Hedge Fund Administrators'']</ref> The accurate and timely calculation of NAV by the administrator is vital.<ref name=autogenerated2 /><ref>[https://www.iomfsa.im/media/2320/soundpracticeguidelines.pdf "Sound Practice Guidelines for Administrators of Alternative Funds including Experienced Investor Funds in the Isle of Man"]</ref>
In 2003, investors in Lancer Group sued hedge fund administrator [[Citco]] for allegedly knowingly disseminating "misleading" Net Asset Value (NAV) statements.<ref name="auto8">{{Cite book|url=https://books.google.com/books?id=y7OYBAAAQBAJ&q=citco+administrator&pg=PA106|title=Hedge Fund Governance: Evaluating Oversight, Independence, and Conflicts|first=Jason|last=Scharfman|date= 2014|publisher=Academic Press|isbn=978-
The case of ''Anwar v. Fairfield Greenwich'' (SDNY) is the major case relating to fund administrator liability for failure to handle its NAV-related obligations properly.<ref name=autogenerated4>
==Businesses==
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* Certain assets, such as [[Goodwill (accounting)|goodwill]] (which broadly represents a company's ability to make future profits), are not necessarily included on a [[balance sheet]] and so will not appear in an NAV calculation.
A company's market value will not always be greater than its NAV. For example, analysts and management estimated that [[Liberty Media Corporation]] was trading for
In contrast to fund valuation, the assets of a company will generally be valued for the purpose of a NAV calculation using the [[book value]], the [[historical cost]], or the [[amortization (accounting)|amortised]] cost of the company's assets, or an appropriate combination of the three.
==Real estate investment trusts==
NAV is one of the valuation indices of [[real estate investment trust]]s (REITs, pronounced "Reets"). NAV is normally quoted "per investment unit" where the value is divided by the number of total outstanding investment units. In simple terms, NAV is an adjusted net asset value reflecting the market values of real estate properties held by an investment corporation. The degree of premium/discount on individual investment unit prices relative to the per-unit NAV serves as the yardstick for assessment. The NAV index is synonymous to the adjusted [[price-to-book ratio]] in which factors such as unrealized losses/gains of owned properties and brand values are reflected. News companies such as PropertyMall typically report on a REIT's NAV when the company reports it.<ref>{{cite web |url=http://www.propertymall.com/press/article/24597 |title=Hammerson - General |publisher=Propertymall.com |access-date=2012-04-17
==Variable insurance and variable annuity contracts==
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