What is an ETF’s Net Asset Value and ‘iNAV’?

Understanding the NAV and iNAV helps you assess if an ETF is trading at fair value

Investing in an exchange-traded fund (ETF) requires careful examination of various factors. While understanding elements like fees, investment strategy, and underlying holdings has become increasingly prevalent, one aspect that tends to be overlooked is the net asset value (NAV).

Many investors associate the constantly fluctuating unit price of an ETF with its true value. However, similar to other investments, the price on display in your brokerage account may not accurately represent its intrinsic worth.

Consider the analogy of a car or a house; the listed price on a website may not necessarily reflect the actual market value of these assets. To determine this value, buyers use various points of research such as an independent valuation.

Fortunately, evaluating the worth of ETFs is more straightforward, thanks to the NAV, which provides a simple and efficient method to gauge an ETF’s price, and thus serves as a reliable indicator to ensure you’re paying fair value when investing.

This blog delves deeper into the significance of NAV, offering insights on accessing information about it to empower you in making well-informed investment decisions.

Nav 101: What is the NAV?


For an ETF, the NAV encompasses the total value of its assets, including cash, shares, bonds, financial derivatives, and other securities, minus any liabilities such as fees, expenses, and potential debt (if the fund utilises leverage), and is calculated once per day. This value is then divided by the number of units outstanding. The basic formula is represented as follows:


NAV = Fund Assets – Fund Liabilities / Units on Issue


How is the NAV calculated? An illustrative example


Let’s consider a hypothetical fund named ABC ETF. This product has the following components:

  • Total value of its assets (cash, shares, bonds, etc.): $1,000,000
  • Liabilities (fees, expenses, etc.): $50,000
  • Number of units outstanding: 50,000

Using the formula for NAV shown above, we substitute the values as follows:

  • $1,000,000 (ETF assets) – $50,000 (ETF liabilities) = $950,000 / 50,000 (units outstanding)
  • NAV = $19 per unit

In this simplified example, the NAV of ABC ETF is $19. This means that, according to the fund’s assets minus liabilities, each unit is theoretically worth $19.


Why is this information valuable?


Picture a scenario where the NAV of the ABC ETF stands at $19 at a specific time, yet its actual trading price on the share market is $20, representing a 5.3% premium above its underlying value.

This discrepancy offers a reliable reference point for assessing whether you are paying the true value of the ETF or potentially overpaying (or underpaying) for its underlying assets. In this example, if a buyer were to purchase ABC ETF, they risk overpaying to invest in the fund based on its NAV.

Where to find the NAV?


Locating the NAV of an ETF is thankfully far less cumbersome than determining the value of a car or house. The NAVs for Betashares ETFs are readily available on the individual fund pages. For each product, investors can find the following information, highlighted in the subsequent screenshot:

  • Under ‘pricing information”, the NAV per unit.
  • Downloadable NAV history, offering a spreadsheet of closing NAV data for each day the ETF has traded since inception.

This accessibility ensures that investors can stay informed about the fund’s value and track its historical NAV trends.

Applying NAV in investing


While mechanisms are in place to ensure the alignment of the unit price of ETFs with their NAV over time, the best way to use this information is to check the NAV before making a trade. This practice ensures that investors are paying fair value for ETFs they want to invest in.

Take for example the Betashares Australia 200 ETF (A200), which concluded trading at $116.78 on November 27, 2023, with a NAV of $116.74.

Recognising that an ETF carries liabilities such as fees and expenses, it is customary for the NAV to be slightly below the share price. However, if the variance becomes significant, it serves as a signal to investors, indicating whether the ETF is trading at a premium or discount and prompting a closer examination.


Why do ETFs trade at a premium or discount to NAV?


In certain circumstances, an ETF may exhibit a noticeable premium or discount to its NAV, and this shouldn’t immediately signal operational deficiencies within the ETF.

One scenario is during periods of extreme market volatility, where the swift movement of stock and bond prices can cause the NAV of a given ETF to lag behind the true value of its underlying assets. This discrepancy is a natural outcome of the rapidly changing market conditions and should stabilise when volatility fades.

Another challenge arises when an ETF on the ASX tracks an international exchange, such as the Betashares FTSE 100 ETF (F100). Due to differing operating hours between the London Stock Exchange (LSE) and the Australian Securities Exchange (ASX), the unit price and NAV may diverge and the NAV may appear “stale” during ASX hours when markets in Europe are closed.

To navigate these dynamics, consider the following best practices:

    • Strategic timing: Exercise caution when trading around market openings or closings, particularly within a 30-minute window. These periods often witness heightened volatility, potentially resulting in broader spreads between NAV and market prices.
    • Use limit orders: In volatile markets, opting for limit orders over market orders can enhance execution. Limit orders enable investors to specify the maximum or minimum price at which they are willing to buy or sell, offering greater control over the trade’s execution price.
    • Check the intraday NAV (iNAV): Distinguished from an ETF’s standard NAV, the iNAV provides a real-time measure of the ETF’s value throughout the trading day. This dynamic metric recalculates the NAV based on current market prices, updating multiple times per minute to align with ongoing market movements.

Note: While iNAVs serve as a valuable gauge when executing ETF trades, it’s essential to recognise their limitations. Similar to NAVs, iNAVs may not accurately reflect true value if market prices become stagnant or stale during trading hours.

Why ETF NAVs generally stay aligned to the unit price


Although there may be occasional divergences, especially in times of extreme market volatility, investors can take comfort in the fact that ETF NAVs and unit prices are designed to closely align on a day-to-day basis. 

This alignment is facilitated by the “creation/redemption mechanism,” a process involving authorised participants (APs). This is covered in greater detail here.

Typically large financial institutions, APs engage in a contractual relationship with ETF distributors to create and redeem fund shares. 

This mechanism ensures ETF liquidity and maintains a tight correlation between a given ETF’s market price and its true asset value. This distinguishes ETFs from other listed investments, such as listed investment companies (LIC), which lack such a mechanism, potentially leading to prolonged discrepancies between NAV and unit prices.



The NAV stands as an important metric in the world of ETF investing. Understanding its significance empowers investors to gauge the true value of their ETF holdings and make well-informed decisions. While occasional divergences from the unit price may occur, the creation/redemption mechanism ensures that ETF NAVs and unit prices remain closely aligned over time.

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Written by

David Bassanese

Chief Economist

David is responsible for developing economic insights and portfolio construction strategies for adviser and retail clients. He was previously an economic columnist for The Australian Financial Review and spent several years as a senior economist and interest rate strategist at Bankers Trust and Macquarie Bank. David also held roles at the Commonwealth Treasury and Organisation for Economic Co-operation and Development (OECD) in Paris, France.

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