What is net asset value?
Net asset value is what something is worth "on the inside" — independent of the price. For a fund it is the fund's total assets divided by the number of units: if the fund owns stocks worth 100 million and has issued 1 million units, the NAV is 100. For a company the equivalent is book value per share — what would be left for shareholders if everything were sold and the debt paid. The price can be above or below it.
For funds: the price should be close
An ETF or mutual fund simply owns a basket of stocks. The basket's value per unit is the NAV, usually calculated every day. If the fund trades at 101 while the NAV is 100, you pay a 1% overprice — a premium. If it trades at 99, you get a 1% discount. For large ETFs the difference is normally under 0.1%, because professionals immediately exploit any deviation. Classic mutual funds are often traded directly at NAV plus a small charge.
For companies: here the price tells a different story
A company with equity of 10 billion and 100 million shares has a book value of 100 per share. If the share trades at 300, the market pays three times book value — because it expects the company to earn money on what it owns. If it trades at 70, the market believes the values in the accounts are too high, or that the company will lose money. The ratio of price to book value is the P/B ratio.
Book value is most telling for banks, property companies and shipping, where the assets can be counted in money. For a software company whose value is ideas and customers, it says almost nothing.
A worked example
A property fund owns buildings worth 500 million and has 50 million in debt. Equity is 450 million. There are 5 million units. NAV = 450 / 5 = 90. If the unit trades at 72, you buy the buildings at a 20% discount — if the valuation in the accounts is right. That "if" is the whole question.
The typical beginner's mistake
Buying a stock below book value and assuming it "must" rise to it. The market may be right: perhaps the assets are worth less than the accounts say. Cheap relative to book value is a question — not an answer.
How you see it in Kiggo
On every stock Kiggo shows P/B — the price relative to book value — and explains whether the figure is high or low for that industry. Kiggo never compares a bank with a software company, because book value means something completely different in the two. For funds Kiggo shows the price; the NAV is on the issuer's site.
Related terms
Frequently asked questions
What is NAV?
Net asset value — a fund's value per unit. It is in the fund's factsheet and is usually updated daily.
Why does an ETF not trade exactly at NAV?
Because it trades on the exchange between buyers and sellers all day, while the NAV is calculated once. Large banks keep the gap small — for big funds it is almost zero.
Is a stock below book value cheap?
Maybe. It can mean the market is overlooking value — or that the accounts are too optimistic. Look at whether the company makes money before you conclude.
Kiggo explains — Kiggo does not advise. We never tell you what to buy or sell, and key figures can only be compared between companies in the same industry. The decision is yours. Last updated 2026-09-23.
Written by Claus Frisch, founder of Kiggo. Not an adviser, not a bank — Kiggo explains, you decide.
