Net Asset Value (NAV)

Formula

How NAV is calculated in a private fund

Each quarter the manager values every holding at fair value, usually following the IPEV Valuation Guidelines within the fair value standards: Accounting Standards Codification (ASC) 820 in the US or, under International Financial Reporting Standards (IFRS), IFRS 13. The fund administrator adds cash and other assets, deducts borrowings, payables and accrued fees and expenses, and allocates the result to partners' capital accounts according to the limited partnership agreement (LPA): contributions, distributions, income, realised and unrealised gains, fees, expenses and the hypothetical carried interest. The IPEV Guidelines define NAV as the amount attributable to the fund's investors on the basis of the fair value of the underlying companies and other assets and liabilities.

Closed-end and open-end presentation

Closed-end private funds do not issue units at NAV. Each LP's share of NAV is the balance of its capital account, reported on a capital account statement. Open-end and evergreen vehicles and registered funds issue and redeem shares at NAV, so they also report NAV per share: net assets attributable to each share outstanding at the close of the period. For US registered funds and business development companies (BDCs), fair value determinations for the investments behind NAV are subject to Securities and Exchange Commission (SEC) Rule 2a-5.

Timing and lag

Private fund NAVs are struck at quarter-end and reach investors weeks or months later, so an LP closing its own books usually holds a NAV dated one quarter earlier. The IPEV Guidelines expect the investor to adjust the last reported NAV for calls and distributions since that date, for subsequent market movements and for other known changes. In secondary transactions the NAV used for pricing has its own date, the NAV reference date.

NAV as the value of an LP's interest

Under ASC 820 an investor may use the investee fund's NAV per share (or its equivalent, such as a capital account) as a practical expedient for fair value if the investment has no readily determinable fair value and is in an investment company within the scope of ASC 946, or in a real estate fund for which it is industry practice to measure investment assets at fair value on a recurring basis and to issue financial statements consistent with the measurement principles of ASC 946 (ASC 820-10-15-4, as amended by ASU 2013-08), and the NAV is calculated consistently with those principles as of the investor's measurement date (ASC 820-10-35-59); investments measured this way are not categorised in the fair value hierarchy under Accounting Standards Update (ASU) 2015-07. See NAV practical expedient. IFRS has no equivalent provision, and investors generally use NAV as a starting point. In both cases the IPEV Guidelines list adjustments that may be needed: reporting lag, a NAV not based on fair value, carried interest and clawback, waived fees, fund terms affecting distributions, and materially different marks by different GPs for the same company. An orderly secondary transaction in the same fund must be considered as one input.

NAV in performance, fees and financing

NAV is the numerator of RVPI, part of total value to paid-in capital (TVPI), and the terminal cash flow in an interim IRR, so the quality of the marks drives reported performance until the fund is realised. After the investment period, management fees are often charged on invested capital or NAV. NAV facilities are loans to a fund secured on its portfolio; guidance published in 2024 by the Institutional Limited Partners Association (ILPA), written for private equity funds, recommends consent of the LPAC where the LPA is silent and whenever proceeds fund distributions. In European non-listed real estate, the NAV defined by the European Association for Investors in Non-Listed Real Estate Vehicles (INREV) adjusts an IFRS NAV for items such as the fair value of property and debt, deferred tax, the amortisation of set-up costs and acquisition expenses, and transfer taxes. The aim is a more accurate economic value of the investment, with set-up and acquisition costs spread across the generations of investors who benefit from them.

Reading NAV critically

NAV is an estimate built mostly on unobservable inputs. LPs look at how much of NAV is unrealised and how old the holdings are, whether marks moved with public markets, how the GP's valuation committee is constituted, and how exit prices compared with prior marks. Where several GPs hold the same company, the IPEV Guidelines treat materially different marks as a reason for the LP to look further.

Worked examples

Examples are illustrative; figures are not market data.

Not the same as

• Assets Under Management (AUM): AUM is a manager-level figure that may include unfunded commitments and gross assets; NAV is a fund's net value at fair value.
• Residual Value to Paid-In (RVPI): RVPI is NAV divided by paid-in capital; NAV is the dollar amount.
• Fair Value: Fair value is the measurement basis for each asset; NAV aggregates those values net of liabilities.

Common mistakes

• Treating NAV as cash value. A secondary buyer may pay more or less, and realisations may differ from the marks.
• Comparing NAVs across funds without considering valuation policy, holding age and reporting date.
• Confusing fund-level NAV with an LP's share, or gross NAV with NAV net of accrued carried interest.
• Using a quarter-old NAV at the year-end without rolling it forward for cash flows and known changes.
• Describing a closed-end private fund's NAV as a per-unit price.

Edge cases

• A fund with fund-level borrowing and large losses can show NAV below the amount owed to lenders, leaving LP NAV near zero or negative.
• Side pockets and investments held through alternative investment vehicles may be reported outside the main fund NAV.
• Clawback provisions mean carried interest already paid can affect LP NAV if later losses reduce total profits.

Questions

External standards

Sources

1. International Private Equity and Venture Capital Valuation Guidelines (2025 edition). IPEV Board, IPEV, Published 11 December 2025; in effect for quarterly reporting periods beginning on or after 1 April 2026; early adoption encouraged. Status: Current; supersedes the December 2022 edition (checked 2026-10-01). Section III 'Net Asset Value'; Section I 4.1, 4.2 (incl. footnote 6), 4.3 — supports: Definition; NAV as starting point for fund-interest fair value; IFRS silent on NAV; adjustments; carried interest deduction; secondary transactions
2. ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. Financial Accounting Standards Board, May 2011. Status: in force (codified in ASC 820) (checked 2026-10-01). ASC 820-10-35-59, 35-60; Master Glossary 'Net Asset Value per Share' (820-10-15-4 as amended by ASU 2013-08) — supports: NAV practical expedient scope and conditions; NAV per share definition
3. ASU 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). Financial Accounting Standards Board, May 2015. Status: in force (codified in ASC 820) (checked 2026-10-01). Summary (main provisions) — supports: Investments measured at NAV under the practical expedient are not categorised in the hierarchy
4. 17 CFR 270.2a-5 - Fair value determination and readily available market quotations (Rule 2a-5). U.S. Securities and Exchange Commission (CFR text via eCFR; LII mirror), eCFR current as of 2026-09-29; last amended 2021-03-08 (effective date of adoption). Status: in force (checked 2026-10-01). 17 CFR 270.2a-5(a), (e)(1) — supports: Fair value determinations for registered funds and BDCs
5. NAV-Based Facilities: Guidance for LPs and GPs. Institutional Limited Partners Association, ILPA, Published 25 July 2024. Status: Current (checked 2026-10-01). Topic page 'NAV-Based Facilities Guidance Roadmap' and Part III (recommendations) — supports: NAV facility guidance: PE scope; LPAC consent recommendations
6. INREV Guidelines (modules incl. INREV NAV and Fee and Expense Metrics). INREV, European Association for Investors in Non-Listed Real Estate Vehicles (INREV), Modular; Fee and Expense Metrics module last updated March 2020, effective for periods ending on or after 31 December 2020. Status: Current (checked 2026-10-01). INREV NAV module (purpose; adjustments to IFRS NAV) — supports: INREV NAV adjusts an IFRS NAV (fair value of property and debt, deferred tax, amortised set-up costs and acquisition expenses, transfer taxes) to reflect economic value and spread costs across investor generations
7. Commission Regulation (EU) 2023/1803 adopting international accounting standards (consolidated IFRS text incl. IFRS 3, IFRS 13, IFRS 16). European Commission (EUR-Lex), 13 August 2023; OJ L 237, 26.9.2023. Status: in force (checked 2026-10-02). Annex, IFRS 13 (full text; no net asset value practical expedient) — supports: IFRS 13 contains no provision equivalent to the ASC 820 NAV practical expedient
8. ASU 2013-08, Financial Services - Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements. Financial Accounting Standards Board, June 2013; effective for fiscal years beginning after 2013-12-15. Status: in force (codified in ASC 946) (checked 2026-10-01). ASC 820-10-15-4(b) as amended — supports: NAV practical expedient scope: investment in an investment company within the scope of Topic 946, or in a real estate fund that measures investment assets at fair value on a recurring basis and issues Topic 946-consistent financial statements

• Fair Value
• Residual Value to Paid-In (RVPI)
• Capital Account Statement
• IPEV Valuation Guidelines
• NAV Lending (NAV Facility)
• Secondary Pricing
• Valuation Policy

• Asset Allocation
• Assets Under Management (AUM)
• Carried Interest (Carry)
• Fund Administrator
• Interval Fund
• Internal Rate of Return (IRR)
• LP-Led Secondary
• Net IRR
• Secondaries
• Total Value to Paid-In (TVPI)
• Two and Twenty
• Volatility