Net Asset Value
A fund's total assets minus total liabilities at a point in time — the single figure every fee, subscription, and redemption is struck against.
Definition
Net asset value (NAV) is a fund's total assets minus its total liabilities, valued as of a specific date. It is the single figure everything else in fund accounting is struck against: subscriptions and redemptions price off it, management and performance fees accrue against it, and capital accounts must sum to it exactly.
Assets typically include cash, digital assets and securities marked to fair value, and receivables. Liabilities typically include accrued fees, redemptions payable, and other accrued expenses. NAV is a net figure by definition — it says nothing about leverage, gross exposure, or committed-but-uncalled capital, all of which sit outside it.
NAV is usually expressed both as a total dollar figure for the fund and, divided by units or shares outstanding, as NAV per unit — the price a new investor pays to subscribe and an existing investor receives to redeem.
Why it matters
A wrong NAV doesn't stay contained to one line item — it flows into every fee calculation, every subscription and redemption price, and every LP statement at once. An overstated NAV overcharges new subscribers and undercharges redeeming investors (and the reverse for an understated one), and a mis-struck performance fee compounds the error into every future high-water mark.
Because NAV touches so many downstream calculations, funds document exactly how it is computed — which assets are marked how, on what cadence, and by whom — in a written valuation policy, rather than leaving it to case-by-case judgment.
Net asset value
A fund's period-end NAV
Take a fund holding $2,000,000 in cash, digital assets marked to fair value at $8,500,000, and $50,000 of receivables — $10,550,000 in total assets. Against that sit $15,000 of accrued management fee, $40,000 of accrued performance fee, and $200,000 of redemptions payable — $255,000 in total liabilities.
NAV = $10,550,000 − $255,000 = $10,295,000. That figure, not the $10,550,000 gross asset total, is what units outstanding divide into to produce NAV per unit.
| Line Item | Amount |
|---|---|
| Cash | $2,000,000 |
| Digital assets (fair value) | $8,500,000 |
| Receivables | $50,000 |
| Total assets | $10,550,000 |
| Accrued management fee | ($15,000) |
| Accrued performance fee | ($40,000) |
| Redemptions payable | ($200,000) |
| Total liabilities | ($255,000) |
| Net asset value | $10,295,000 |
Common mistakes
Confusing NAV with assets under management (AUM) — AUM figures sometimes include gross exposure, leverage, or committed-but-uncalled capital, while NAV is strictly a net figure.
Marking some assets to fair value while leaving others at cost or at a stale price, so the same NAV blends inconsistent valuation bases within a single figure.
Netting cash-based liabilities inconsistently — forgetting accrued fees or redemptions payable produces an inflated NAV that overcharges new subscribers.
Double-counting exposure — including a spot holding and an offsetting derivative hedge on the same notional at full value rather than netting them or accounting for the hedge separately.
In practice
Crypto NAV brings a pricing problem traditional funds rarely face at the same scale: the same underlying asset can trade at meaningfully different prices across venues, and a contract address can collide with an unrelated or fraudulent token sharing the same ticker. A documented valuation policy that fixes which source prices which asset — rather than picking whichever venue gives the better mark that day — is the main defense.
Many crypto funds also run day-to-day NAV entirely in-house before ever engaging a fund administrator, which raises the stakes on getting the roll-forward arithmetic right without a second set of eyes. The free NAV Validator runs up to seven independent checks against your own period-end numbers — roll-forward arithmetic, fee reasonableness, a performance-fee cap check, expense drag, and sanity checks always, plus two per-LP reconciliation checks when you supply per-LP data.
Questions, answered
What is net asset value (NAV) in a hedge fund?
Net asset value is a fund's total assets minus its total liabilities at a specific point in time. It's the figure that subscriptions, redemptions, and fee calculations are struck against, usually expressed both as a fund-wide total and per unit.
Is NAV the same as assets under management (AUM)?
No. NAV is strictly a net figure — assets minus liabilities. AUM is sometimes used more loosely and can include gross exposure or committed-but-uncalled capital, so the two numbers can diverge meaningfully for a leveraged or actively-fundraising fund.
How often is NAV calculated?
Frequency varies by fund — common cadences are daily, weekly, or monthly, with month-end NAV usually the version used for official reporting, fee accrual, and LP statements. Crypto funds with 24/7 markets sometimes strike NAV more frequently than traditional funds.
What causes a NAV to be wrong?
The most common causes are stale or inconsistent pricing across assets, a missed or duplicated liability such as an accrued fee or pending redemption, and an unsettled trade or transfer that hasn't yet been reflected in the ledger.
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