Legal Definitions - asset value

Asset value refers to the market value of a share in a mutual fund. It is calculated by subtracting any liabilities of the fund from its total assets and then dividing the difference by the number of outstanding fund shares. This calculation is also known as the net asset value (NAV).

Suppose a mutual fund has total assets worth $10 million and liabilities worth $2 million. The number of outstanding fund shares is 1 million. The asset value or NAV of each share would be:

($10 million - $2 million) / 1 million = $8

Therefore, the asset value or NAV of each share in the mutual fund is $8.

This calculation is important for investors because it helps them understand the value of their investment in the mutual fund. It also helps them compare the performance of different mutual funds.