What is a mutual fund's Net Asset Value (NAV)?

The Net Asset Value (NAV) of a mutual fund represents the per-share value of the fund, which is calculated by taking the total assets of the fund, subtracting any liabilities, and then dividing that figure by the number of shares outstanding. This value is crucial for investors because it helps determine the price at which shares of the mutual fund can be bought or sold. The NAV is calculated at the end of each trading day based on the closing prices of the underlying assets in the fund's portfolio.

Understanding NAV is essential for investors as it reflects the actual worth of each share in the fund, enabling them to make informed decisions regarding buying, holding, or selling their shares. Thus, it is a key metric in assessing the value of their investment in the mutual fund.