NAV (net asset value), or NAB (nilai aktiva bersih) in Indonesian, is the net value of all the assets in a mutual fund or ETF after liabilities are subtracted, divided by the number of units outstanding. This number is the reference price per unit. With a mutual fund, you transact at the NAV price. With an ETF, the market price can sit slightly above NAV (a premium) or below it (a discount).

Many NAV explainers stop at the mutual fund definition. But if you also buy ETFs, there is one more thing you need to know: the price you pay on the market is not always the same as the NAV. This article explains the NAV formula, how mutual fund NAV is calculated and announced, and how to read ETF premiums and discounts before you buy.

Key Points

• NAV and NAB are the same thing. NAV is the English term, and NAB is the Indonesian term for net asset value. The NAV per unit is what you use for transactions.
• The formula is simple: (total assets minus total liabilities) divided by the number of units outstanding.
• Mutual fund NAV is calculated every trading day by the custodian bank. Because it is calculated after the market closes, the price only shows up the next day.
• A high NAV does not mean expensive. The NAV per unit is just a reference price. What decides your gain or loss is the percentage change.
• An ETF's market price can differ from its NAV. The gap is called a premium when the price is above NAV and a discount when it is below NAV.
• The gap is usually small, but it can widen when the market for the underlying assets is closed or less liquid.

What Are NAV and NAB?

NAV is the net value of all the assets an investment fund holds. The fund can be a mutual fund (reksadana in Indonesian) or an ETF (exchange traded fund). Net value means liabilities have already been subtracted, for example management fees that have not been paid yet.

Because an investment fund is divided into units, NAV is usually stated per unit. A unit is like a "small slice" of the whole fund. When you buy a mutual fund, you buy a number of units at that day's NAV per unit.

NAV is different from AUM (assets under management). AUM is the total amount of money managed, while NAV per unit is the price of one unit.

The NAV Formula and a Worked Example

NAV per unit = (total assets - total liabilities) ÷ units outstanding

A hypothetical mutual fund example:

Here is the math. Rp105 billion minus Rp5 billion gives Rp100 billion. Rp100 billion divided by 80 million units gives Rp1,250 per unit.

If you buy this mutual fund with Rp5,000,000 when the NAV per unit is Rp1,250, you get 4,000 units (Rp5,000,000 divided by Rp1,250).

How Mutual Fund NAV Is Calculated and Announced

For open-ended mutual funds, there is a fixed process:

1. Calculated every trading day. Under OJK Regulation 47/POJK.04/2015 on daily NAV announcement for open-ended mutual funds, the custodian bank must calculate the NAB per unit on every trading day. The custodian bank is the party that holds the mutual fund's assets, so the investment manager does not calculate it on its own.
2. Reported to the Financial Services Authority (OJK). The result is reported to the OJK no later than 10:00 WIB on the next trading day.
3. Announced to the public. The announcement is made no later than the next trading day.

That is why you can only see today's mutual fund price tomorrow. When you buy, you do not know exactly what price you will get. According to Bareksa, the cut-off time mentioned for purchases is 13:00 WIB, with a complete application and payment. The cut-off time and the NAV used can differ for each product, so check the prospectus.

If the mutual fund's assets are volatile, its NAV moves too. That is why mutual funds can lose money, as discussed in Can mutual funds lose money?.

A High NAV Does Not Mean Expensive

This is the most common misconception. Many beginners think a mutual fund with a NAV of Rp25,000 is more "expensive" than one at Rp1,250. But the NAV number is just the result of the asset's past ups and downs. A mutual fund that has been running for a long time usually has a higher NAV than a newly launched one.

A hypothetical example. You put Rp5,000,000 into two mutual funds, and both rise 8%.

The result is the same. What decides your gain or loss is the percentage change in NAV, not how big the number is.

How to Calculate Gains and Losses from NAV

Change = (NAV at sale - NAV at purchase) ÷ NAV at purchase × 100%

Let's continue with the first mutual fund example. You bought 4,000 units at a NAV of Rp1,250 (capital of Rp5,000,000). Some time later, the NAV per unit becomes Rp1,350.

• Value of units: 4,000 × Rp1,350 = Rp5,400,000.
• Change: (Rp1,350 - Rp1,250) ÷ Rp1,250 × 100% = 8%.

This calculation does not include selling fees, management fees, and taxes that may apply. If the NAV falls, the calculation is the same and the result is negative. Past results also do not guarantee future results.

ETF NAV vs Market Price: Premium and Discount

An ETF has a NAV just like a mutual fund. An ETF's NAV is usually calculated at the end of the trading day from the value of the assets inside it. The difference is that an ETF is traded on an exchange, so its price moves throughout trading hours. The basic concept is covered in ETFs: how they work, types, and investment risks.

So there are two different numbers: NAV (the value of the assets inside) and the market price (the price a buyer and a seller agree on). The gap between them:

• Premium: the market price is above NAV.
• Discount: the market price is below NAV.

Premium or discount = (market price - NAV) ÷ NAV × 100%

The example above is hypothetical. At a 0.50% premium, you pay 0.50% more than the value of the assets inside. At a 0.60% discount, you pay less. A small gap like this is usually normal. What you should watch out for is a large gap or one that lasts a long time.

Why Premiums and Discounts Happen

Under normal conditions, an ETF's market price tends to follow the value of the assets inside it. According to Invesco, there is a mechanism that keeps this in line. Certain parties called authorized participants (APs) can create or redeem ETF units in large amounts. If the market price drifts away from the asset value, APs can profit from the gap, and their activity pulls the price back toward the asset value.

The gap can widen for several reasons:

• The underlying asset market is closed. An ETF holding US stocks can still be traded at certain hours, while the NAV calculation refers to closing prices. When the underlying market is closed or prices are hard to get, the gap can stay open.
• The assets inside are less liquid. According to Invesco, the average discount on investment grade corporate bond ETFs reached 3.4% in mid-March 2020, and some went beyond 8%, when trading in the underlying assets was difficult.
• The market is volatile. Demand and supply can move faster than the underlying asset prices update.
• Timing differences. Comparing an ETF price with a NAV calculated in a different time zone or at a different hour can be misleading.

Many ETFs also publish an estimated NAV throughout the day called iNAV (indicative NAV). Invesco warns that iNAV should not be your only reference.

How to Read Premiums and Discounts Before You Buy

1. Find the latest NAV from the ETF issuer. The issuer usually publishes the NAV and, in many cases, premium or discount data.
2. Compare it with the market price at a matching time. Make sure the NAV and the price refer to the same date and hour.
3. Calculate the gap using the premium or discount formula above.
4. Check the cause. Is the underlying market closed, are the assets inside less liquid, or is the market volatile? A large gap with no clear reason is a sign to be careful.
5. Look at the ETF's liquidity. ETFs with low volume tend to have wider bid-ask spreads. Don't buy with a market order if liquidity is thin.
6. Use a limit order. Set the price you want so you don't pay a premium you didn't notice.

Mutual Fund NAV vs ETF NAV

NAV for ETF Tokens

The same concept applies to tokens that track ETF prices. A token's price on a platform can differ from the original ETF's price or its NAV, especially when its home exchange is closed. ETF tokens on Mobee are designed to follow the reference ETF's price, not to represent ownership of the ETF itself, so a price gap is one of the risks you should pay attention to, along with issuer and custodian risk.

Before you buy, check the product information from the issuer and compare the token price with the reference price or NAV at a matching time. A similar guide for commodity tokens is in A guide to investing in token-based commodity ETFs. The structure and risks are explained in Tokenized ETFs and from real assets to digital tokens.

Common Mistakes When Reading NAV

• Thinking a high NAV means expensive. Compare the percentage change, not the number.
• Thinking you can see a mutual fund price right away. The NAV only shows up the next day.
• Treating an ETF's NAV as the same as its market price. They can differ, and the gap can widen when the underlying market is closed.
• Comparing NAV and price at different times. The gap you see may just be a difference in the hour.
• Ignoring costs. NAV does not account for transaction fees, selling fees, and taxes you may have to pay.
• Comparing NAV across different products. Compare performance and risk, not the NAV per unit number.

Start with Mobee

Mobee is a digital asset platform licensed and supervised by OJK, so you can follow market opportunities and investment products with more direction. Start your investing journey with Mobee and choose products that fit your goals and risk profile. Download the Mobee app to access the market straight from your phone.

Conclusion

NAV is the net value of assets divided by the number of units, and it is the reference price for mutual funds and ETFs. With a mutual fund, you transact at the NAV calculated by the custodian bank, which only shows up tomorrow. With an ETF, the market price moves in real time and can drift from NAV as a premium or discount. A high NAV number does not mean expensive, and a large premium or discount is a sign to check the cause first before you buy.

FAQ

What is NAV?

NAV (net asset value) is the net value of the assets in a mutual fund or ETF after liabilities are subtracted, divided by the number of units outstanding. In Indonesia it is also called nilai aktiva bersih (NAB). This number is the reference price per unit.

What is the difference between NAV and NAB?

There is no difference. NAV is the English term and NAB is the Indonesian term for net asset value. In transactions, what is used is the NAV or NAB per unit.

How do you calculate NAV?

Subtract total liabilities from total assets, then divide by the number of units outstanding. For example, assets of Rp105 billion and liabilities of Rp5 billion give Rp100 billion. Divided by 80 million units, the NAV per unit is Rp1,250.

Does a high NAV mean a mutual fund is expensive?

No. The NAV number is just a reference price built from the history of the assets' ups and downs. What decides your gain or loss is the percentage change in NAV since you bought.

Why does mutual fund NAV only show up tomorrow?

The custodian bank calculates the NAV after the trading day ends, and the result is announced no later than the next trading day. That is why you can only see today's mutual fund price the following day.

What are ETF premiums and discounts?

A premium means the ETF's market price is above its NAV, and a discount means it is below NAV. A small gap is usually normal. A large gap, or one that lasts a long time, is worth checking for a cause before you buy.

What is the difference between NAV and AUM?

AUM is the total amount of money an investment product manages. NAV per unit is the price of one unit, which is the net asset value divided by the number of units outstanding.

Disclaimer

This article is for information and education only. It is not investment advice, a recommendation to buy or sell any asset, or financial advice. The calculation examples are hypothetical, and rules and market figures can change. Investing in mutual funds, ETFs, and digital assets carries risk, including losing part or all of your funds. Do your own research and consider your risk tolerance before making any decision. Mobee is operated by PT CTXG Indonesia Berkarya, which is licensed and supervised by the Financial Services Authority (OJK).