The net asset value (NAV) return is an important metric used to measure the performance of mutual funds and exchange-traded funds (ETFs) over a given period of time. It is calculated by tracking the changes in the net asset value of the fund. NAV can differ from the fund’s market price because it is computed as of the end of each trading day, whereas the securities that comprise the fund are typically traded throughout the day.

Unlike total return or market value return, NAV return is not impacted by daily market movements. For this reason, it’s useful for tracking the overall performance of a fund. It helps investors assess the fund’s performance and fees on a longer-term basis, as well as the fund manager’s skill in allocating fund assets and meeting the fund’s specific goals.

Calculating an investment fund’s NAV return is fairly straightforward. The investor or analyst would begin by calculating the start and end NAV of the investment fund. Then, they would subtract the start NAV from the end NAV, and divide by the start NAV, in order to arrive at the NAV return.

Investors should note that, while NAV return is an important indicator of fund performance, it should never be used in isolation. It provides an accurate measure of the overall performance of the fund, but does not take into account the fund’s market price or the returns of similar funds. Taking this into consideration, NAV return is best used in conjunction with other metrics to get a complete picture of the fund’s performance.

In short, the NAV return is a useful metric for evaluating the performance of an investment fund over a given period of time. It supplements other performance metrics, such as total return and market value return, and helps investors assess the fund’s performance and fees on an overall basis.