Net Asset Value per Share (NAVPS)

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Meaning and definition of Net Asset Value per Share

The net asset value per share can be defined as an expression for net asset value that indicates the value per share for a fund (exchange-traded, mutual, and closed-end) or a company.

As explained by Investopedia, Net Asset Value per Share (NAVPS) refers to the value of a single unit, or share, or a fund. This number for a mutual fund indicates the price at which shares are bought and sold. Since closed-end and exchange traded funds are listed and traded like stocks, which are influenced by market forces, their NAVPS and selling/buying prices per share can be different.

Calculating the Net Asset Value per Share

The NAVPS is calculated by dividing the total net asset value of the company by the number of outstanding shares.


The general formula used for computation of NAVPS is:

NAVPS = Net Assets / Number of Shares Outstanding

How it works

The working of NAVPS is explained in the following example:

Let’s presume that at the close of yesterday’s trading, the company ABC mutual fund held securities worth $10,500,000, cash of $1,000,000, and liabilities worth $500,000. If the fund held 1,000,000 shares outstanding, then yesterday’s NAVPS would be calculated as:

NAVPS = ($10,500,000 + $1,000,000 - $500,000) / 1,000,000 = $11.00

Now, let’s further presume that the next day, Company ABC makes a capital gains distribution of $1 per share. This would result in a fall I the NAVPS by $1 thus making it $10 per share as the people who buy fund shares after this date are not entitled to the distribution.

Moreover, it is noteworthy that akin to assets and liabilities, the number of shares outstanding fluctuates on a daily basis as investors buy and/or sell their shares.

Importance of NAVPS

The NAVPS is like the stock price as it represents the value of one share, besides, both measures provide the investors with a way of comparing fund performance with the market or industry benchmarks (like the S&P 500). However, some analysts present the argument that comparing long-term changes in the NAVPS of a fund is not as meaningful as comparing long-term changes in the price of stock as funds must periodically distribute the capital gains among shareholders. Moreover, they also argue that evaluation of short-term changes in NAVPS is generally more productive. 

Quote Guest, 19 September, 2016
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