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Search for an ETF or holding
Search for an ETF or holding
Updated 2mo ago.
Updated 2mo ago.
Net asset value (NAV) is the total value of a fund's assets minus its liabilities, divided by the number of outstanding shares. It's the "true price" of an ETF share, calculated once daily after market close. The market price may differ slightly from the NAV.
If an ETF like XIC.TO holds stocks worth $10 billion total, has $5 million in liabilities and 300 million shares outstanding, its NAV is (10,000,000,000 - 5,000,000) / 300,000,000 = $33.32 per share. If the ETF trades at $33.35 on the exchange, there is a $0.03 premium. For highly liquid ETFs like XIU.TO or ZAG.TO, the difference between price and NAV is typically tiny (a few cents).
NAV is recalculated every business day after 4 PM (TSX close). The calculation accounts for the market value of each holding, plus cash, minus payable expenses. For ETFs holding foreign stocks, the day's exchange rates are used.
When the market price is above the NAV, the ETF trades at a "premium." When it's below, it trades at a "discount." Authorized participants (large banks) create or redeem shares to keep the price close to NAV — this is the creation/redemption mechanism unique to ETFs.
NAV confirms the real value of your investment, regardless of market price fluctuations. For beginners, it's reassuring to know that ETFs have a built-in mechanism that prevents the price from straying far from the actual value of the underlying assets.