The Biggest Myths In Net Asset Value

The Biggest Myths In Net Asset Value by Dave Nadig, FactSet

It’s nice to have things you can count on in investing – and pretty rare. One of those stalwart items is the "Net Asset Value" calculated by all mutual funds and ETFs. It’s a nearly paternalistic piece of data-from-above that tells you with absolute certainty “this is what your investment is worth.”

Alas, it’s not, really, and it’s important to understand why.

The Two Biggest Net Asset Value Myths

Myth 1: The NAV is the portfolio holdings divided by the number of shares in the fund or ETF.

Let’s start with the biggest myth of all, which is that NAV is a snapshot in time of precisely what’s going on in...