Glossary
What is NAV (Net Asset Value)?
Updated Reviewed quarterly
Net Asset Value (NAV) is the per-unit value of a fund's underlying holdings — total assets minus total liabilities, divided by units on issue. It's the fundamental price an ETF unit should trade at. The market price of an ETF can deviate from NAV intraday (creating a premium or discount), but authorised participants arbitrage the gap so the divergence stays small for liquid funds.
For an ETF that tracks the S&P 500, the NAV is the value of all the underlying shares the fund holds, divided by the number of fund units outstanding. If the S&P 500 closes up 1%, NAV moves up roughly 1%.
The market price of an ETF — what you actually pay — can drift slightly above (premium) or below (discount) NAV during the trading day. Authorised participants (institutional market-makers) profit by arbitraging these gaps: they create new ETF units when the market price runs above NAV, and redeem units when it runs below. This mechanism keeps NAV-vs-price divergence tight for liquid funds (typically under 0.1% on broad-market US ETFs; can be wider on thinly-traded or international funds).
For NZ investors, NAV matters most when buying or selling NZX-listed ETFs in low-volume periods (e.g. first hour of trading, or for niche Smartshares funds). A NAV-aware limit order can sometimes get a better fill than a market order. For high-volume US ETFs like VOO or SPY, the spread is so tight that market orders work fine.
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