Net asset value (NAV)
Net asset value, or NAV, is the current value of a fund's assets minus its liabilities. Expressed per share or per investor interest, NAV is the number that determines what a position in the fund is actually worth at a given point in time. Investors subscribe at NAV. Investors redeem at NAV. Performance is measured against changes in NAV. Almost every other fund metric — IRR, multiple, performance fees — depends on NAV being calculated accurately and on the right cadence.
How NAV applies in practice
A NAV calculation is a multi-step process that takes time the more illiquid the underlying positions are. For a liquid fund holding traded securities, NAV can be struck nightly. For a private equity fund holding stakes in operating companies, NAV requires careful valuation work each quarter.
- Position valuation. Mark every holding to current value — last trade for liquid securities, valuation methodology for illiquid positions.
- Accrued income and expense. Recognize interest, dividends, management fees, and expenses up to the calculation date.
- Liabilities. Account for payables, short positions, and any other obligations.
- Net assets. Total assets minus total liabilities.
- Allocation. Net assets are allocated across investor capital accounts using the fund's allocation rules — pro-rata, class-specific, side-pocket treatment.
- Per-share or per-interest NAV. The final number that drives subscriptions, redemptions, performance fees, and statements.
Why NAV matters
NAV is the single number investors trust the fund to calculate honestly. Errors are consequential in both directions — overstate NAV and the manager looks better than they are, performance fees may be over-collected, redemptions may go out at the wrong price. Understate NAV and subscriptions come in cheap, investors get unfair entry points, statements look worse than the underlying portfolio. Either way, the gap between reported NAV and reality is reputational risk that compounds quickly.
That is why the structural separation of fund administration from fund management matters. An independent administrator calculating NAV — with documented methodology, consistent application, and audit oversight — is what gives investors confidence that the number they see on their statement reflects the actual portfolio, not the manager's preferred narrative. The process matters at least as much as the math.
Closely related concepts
Fund administration
The function that calculates NAV.
Capital call
Updates NAV as called capital flows in.
Waterfall distribution
Triggered against NAV thresholds.
Management fee
Often calculated as a percentage of NAV.
Monthly close
The fund's NAV cadence drives its close cadence.
Consolidated financials
For master-feeder or fund-of-funds structures.
Common questions about NAV
How is NAV calculated?
By marking every position to current value, summing those values, subtracting accrued liabilities (management fees, expenses, payables), and allocating net assets across investor capital accounts.
How often is NAV calculated?
Hedge funds typically monthly. Private equity and venture funds typically quarterly. Mutual funds daily at market close. The cadence is driven by liquidity terms.
What's the hardest part about NAV?
Valuing illiquid positions — private companies, real assets, distressed debt. Marks for these positions are judgmental and require defensible methodology, board oversight, and consistent application.
Does AMG build NAV calculation tools?
Yes — NAV calculation is part of the fund-admin IP we license, with support for multi-currency, multi-class, side pockets, and investor-level allocations.
Need NAV infrastructure that scales?
See the fund-admin IP available for license.