Net Asset Value (NAV)
The total value of a fund's underlying holdings divided by its number of outstanding shares, representing the fund's fair per-share value.
Net Asset Value is calculated by taking the total market value of everything a fund holds — such as the underlying crypto assets in a spot ETF — subtracting any liabilities, and dividing the result by the number of outstanding shares, producing a per-share value that represents what the fund's holdings are actually worth. NAV is typically calculated once per day after markets close, based on each holding's closing price.
An ETF's actual market trading price can temporarily diverge from its NAV, trading at a premium (above NAV) or discount (below NAV), but the creation and redemption process carried out by authorized participants (see Kaavon's "Authorized Participant" glossary definition) is specifically designed to arbitrage away large or persistent gaps between market price and NAV, keeping the two closely aligned under normal market conditions. A persistently wide premium or discount to NAV can signal unusual supply-demand imbalances or constraints on the creation/redemption mechanism itself.
Examples
- A Bitcoin ETF's NAV is calculated by valuing its total bitcoin holdings at the day's closing price and dividing by the number of outstanding shares.
- If an ETF's market price trades notably above its NAV, authorized participants are incentivized to create new shares and sell them, which tends to push the price back toward NAV.