Indicative Net Asset Value (iNAV)
What Is Indicative Net Asset Value (iNAV)?
Indicative net asset value (iNAV) is a measure of the intraday net asset value (NAV) of an investment. INAV is reported roughly at regular intervals. It provides investors with a measure of the value of the investment over the course of the day.
Understanding Indicative Net Asset Value (iNAV)
The iNAV is reported by a calculation agent, commonly the exchange that the investment is trading on. An iNAV can be reported for both closed-end mutual funds and exchange-traded funds (ETFs).
The iNAV involves a similar methodology as a fund's accounting NAV. The calculation agent will involve the laid out price of all securities in the portfolio to create the total asset value. The fund's liabilities are subtracted from total assets and the remainder is partitioned by the number of shares. Calculation agents approach fund data for generating the iNAV like clockwork over the course of the day. At times, the iNAV may likewise be given its own ticker for the purpose of tracking.
Indicative Net Asset Value (iNAV) versus Net Asset Value (NAV)
The iNAV is an instrument that assists with keeping funds trading close to their par value. With iNAV reports like clockwork, it addresses an almost real-time perspective on the value of a fund. Reporting an iNAV can assist a fund with staying away from huge premium and discount trading.
Closed-end funds and ETFs work out net asset values in view of their status as a mutual fund investment under the Investment Company Act of 1940. While they work out a daily net asset value, the funds trade on the open market like stocks, with transactions happening at the market price.
The accounting NAV is a function of their registered status and a requirement of the Securities and Exchange Commission (SEC). An investment's accounting NAV is calculated toward the end of each trading day.
Special Considerations
Premium and Discounts
Since closed-end funds and ETFs trade on an exchange, they will frequently offer a premium or discount to their NAV. The iNAV can assist with keeping funds trading all the more closely to their accounting value (in spite of the fact that deviations actually happen).
Premiums and discounts can happen for some reasons, and they are much of the time a steady trend for some funds. A premium might happen when investors are bullish on a fund's underlying holdings or have a positive outlook on the fund's management. Discounts generally happen when investors are bearish on the fund or distrustful of the fund's management. Supply, demand, and timing of financial market reporting can likewise influence the fund's exchange trading price.
Features
- Indicative net asset value (iNAV) can be reported for both closed-end mutual funds and exchange-traded funds (ETFs).
- Indicative net asset value (iNAV) is reported roughly at regular intervals by a calculation agent, ordinarily the exchange that the investment is trading on.
- To concoct the indicative net asset value (iNAV), the calculation agent will involve the laid out price of all securities in the portfolio to produce the total asset value; then, at that point, the fund's liabilities are subtracted from total assets and the remainder is partitioned by the number of shares.
- Indicative net asset value (iNAV) is a measure of the intraday net asset value (NAV) of an investment.
