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What are net asset value reports?

Three things quarterly NAVs can tell investors

by Alex Broudy, Technical & Financial Writer
Aug 24, 2022

You may have recently seen social media posts about Net Asset Value (NAV) reports and wondered, what are NAVs and what do they mean to me as an investor? In private capital markets, NAV reports evaluate investments such as private equity and open-end funds. They are typically released quarterly to help investors understand share price performance and compare investments within an industry category. Here are three ways that investors can use NAV reports to see how their investments are measuring up.

  • NAVs can tell investors what the value of their investment is worth per share. This is done by calculating the total asset value minus the total liabilities value divided by the total number of outstanding shares. The result is a per-share calculation that details the investment’s net asset value. This per-share NAV price can help investors determine the value of their investment from the first quarter they’re invested to the last. 
  • NAVs can tell investors whether their investment is trading at a premium or at a discount. This is calculated by comparing the current price of their investment with the latest NAV report. If the current price is below the NAV then the investment is trading at a discount to NAV. If the price clocks in above the reported NAV, then there is an investment premium. In other words, the investment would be trading for more than what the NAV reports it’s worth. 
  • NAVs can tell investors how their investment is trending over time and how their investment is performing in comparison to others. For example, if a private market investment produces a per-share NAV of $1.00 and its competition produces a NAV of $0.50 per share, then the second investment would be trading at a $0.50 discount to the first. With NAVs, investors can compare performance using a common metric. Since private market investments are by definition not traded on public markets where prices are updated at least daily, tracking NAV performance over time can help investors determine whether their investment is meeting its potential or not. This way, investors can make informed decisions. 

There are many factors to consider when evaluating investments. While NAVs are designed to give investors share price insight at a glance, they can also provide long-term investors with performance insights. This makes it possible to compare NAVs of a single private investment over time and track its performance against other investments within the same industry as well. 

Using NAVs is just one way to determine private investment performance. To learn more about private market investments and investment tools, subscribe for updates below.

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