how etf nav calculated

How is ETF NAV Calculated?

1. Calculate the Market Value of the Underlying Assets:
   • Determine the market value of each security in the ETF's portfolio based on real-time market prices or closing prices from the previous day.
2. Sum the Market Values:
   • Add up the market values of all the underlying securities to arrive at the total market value of the ETF portfolio.
3. Deduct Fees and Expenses:
   • Subtract any management fees, administrative expenses, and operational costs incurred by the ETF from the total market value.
4. Divide by Number of Shares Outstanding:
   • Divide the adjusted market value by the number of ETF shares outstanding. This gives you the Net Asset Value (NAV) per share.

Example:

Consider an ETF with 1 million shares outstanding that invests in the following underlying assets:

• Apple (AAPL): 25% of portfolio, market value as of close = $25 million
• Microsoft (MSFT): 30% of portfolio, market value as of close = $30 million
• Amazon (AMZN): 20% of portfolio, market value as of close = $20 million
• Tesla (TSLA): 15% of portfolio, market value as of close = $15 million
• Google (GOOGL): 10% of portfolio, market value as of close = $10 million

Calculation:

1. Total Market Value: $25 million + $30 million + $20 million + $15 million + $10 million = $100 million
2. Deduct Fees and Expenses: Assume $1 million in fees and expenses
3. Net Market Value: $100 million - $1 million = $99 million
4. NAV per Share: $99 million ÷ 1 million shares = $99

Therefore, the ETF's NAV per share would be $99.