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.
