Advanced English Dialogue for Business – Net asset values

Listen to a Business English Dialogue About Net asset values

Avery: Hi Danielle, have you ever heard of net asset values?

Danielle: No, I haven’t. What are they?

Avery: Net asset values, or NAVs, are used to determine the value of a mutual fund or exchange-traded fund (ETF) by subtracting its liabilities from its assets and dividing by the number of outstanding shares.

Danielle: Oh, I see. So, it’s like calculating the worth of the fund per share?

Avery: Exactly! NAVs are typically calculated at the end of each trading day and represent the price at which investors can buy or sell shares of the fund.

Danielle: Are there any factors that can affect a fund’s NAV?

Avery: Yes, changes in the value of the fund’s underlying investments, as well as any income or expenses accrued by the fund, can impact its NAV.

Danielle: How do investors use NAVs when investing in mutual funds or ETFs?

Avery: Investors use NAVs as a reference point to gauge the performance and value of their investments, as well as to make buying or selling decisions.

Danielle: Are there any limitations to using NAVs as a measure of a fund’s value?

Avery: While NAVs provide a snapshot of a fund’s value, they may not reflect its true market value due to factors like trading costs or changes in market conditions.

Danielle: Thanks for explaining, Avery. NAVs seem like an important metric for investors to understand when evaluating mutual funds or ETFs.

Avery: You’re welcome, Danielle. They’re indeed a fundamental aspect of fund investing, helping investors make informed decisions about their portfolios.