Net Asset Value Per Share – NAVPS Definition

Net asset value per share (NAVPS) is an expression for net asset value that represents the value per share of a mutual fund, an exchange-traded fund (ETF), or a closed-end fund. It is calculated by dividing the total net asset value of the fund or company by the number of shares outstanding and is also known as book value per share.

$\begin{aligned} &\text{Net Asset Value Per Share} = \frac{NAV}{\text{Shares Outstanding}}\\ &\textbf{where:}\\ &NAV=\text{Assets -- Liabilities}\\ \end{aligned}$​Net Asset Value Per Share=Shares OutstandingNAV​where:NAV=Assets – Liabilities​

Net asset value per share (NAVPS) is calculated by dividing the net asset value by the number of shares outstanding.

The net asset value per share (NAVPS) is often used in relation to open-end or mutual funds since shares of such funds registered with the U.S. Securities and Exchange Commission (SEC) are redeemed at their net asset value.

Referring to the formula for net asset value per share (NAVPS) above, assets include the total market value of the fund's investments, cash and cash equivalents, receivables, and accrued income. Liabilities equal total short-term and long-term liabilities, plus all accrued expenses, such as staff salaries, utilities, and other operational expenses. The total number of expenses may be large as management expenses, distribution and marketing expenses, transfer agent fees, custodian, and audit fees may all be included.

• NAVPS represents the value per share of a mutual fund, ETF, or closed-end fund.
• It is often used in relation to open-end mutual funds since shares are redeemed at their NAV.
• Market price and NAVPS, however, may vary for closed-end funds and ETFs.

Consider a mutual fund with 7.5 million shares outstanding has $500 million in investments, $15 million in cash, $1.5 million in receivables and accrued income of $250,000. As for liabilities, the fund has $20 million in short-term liabilities and $5 million in long-term liabilities. The fund has $35,000 of accrued operational expenses and $15,000 of other accrued expenses. The assets, liabilities and NAVPS are calculated as:

$\begin{aligned} \textbf{Assets} &= \$500,000,000 + \$15,000,000 + \$1,500,000 + \$250,000 = \$516,750,000\\ \textbf{Liabilities} &= \$20,000,000 + \$5,000,000 + \$35,000 + \$15,000 = \$25,050,000\\ \textbf{NAVPS} &= \frac{(\$516,750,000 - \$25,050,000)}{7,500,000}\\ &=\frac{\$491,700,000}{7,500,000} = \$65.56 \end{aligned}$AssetsLiabilitiesNAVPS​=$500,000,000+$15,000,000+$1,500,000+$250,000=$516,750,000=$20,000,000+$5,000,000+$35,000+$15,000=$25,050,000=7,500,000($516,750,000−$25,050,000)​​

For mutual funds and ETFs, the NAVPS is often readily available on sites like Morningstar. As noted below, the market price and NAVPS of ETFs may differ. For example, the market price of the SPDR S&P 500 ETF is $279.14 as of Feb. 22, 2019, while its NAVPS is recorded as $279.18 on Morningstar.

For a mutual fund, the NAVPS is the price at which shares are bought and sold at the end of each trading day. Exchange-traded funds (ETFs) and closed-end funds are different in that they trade as stocks throughout the trading day. Because these types of funds are subject to market forces, their NAVPS at any given time may diverge from the actual buying and selling prices of the funds.

The NAVPS for ETFs and closed-end funds are calculated at the end of the trading day for reporting purposes but are updated many times per minute in real time throughout the trading day.

In the context of corporate financial statements of publicly traded companies, the NAVPS or book value per share is usually below the market price per share. The historical cost accounting principle, which tends to understate certain asset values, and the supply and demand forces of the marketplace generally push stock prices above book value per share valuations.

For related insight, read more about the difference between an ETF’s NAVPS and market price.