Definition
iNAV (Indicative Net Asset Value)
iNAV is a near-real-time estimate of an ETF's per-unit net asset value, recalculated frequently through the trading day from the live prices of the underlying holdings.
Indian exchanges and AMCs disseminate iNAV at short intervals (typically every 15 seconds or so) so investors can judge whether an ETF is trading at a premium or discount to fair value. Unlike the official end-of-day NAV, iNAV updates intraday to track the moving value of the basket.
iNAV is the reference that authorised participants and market makers arbitrage against: if the screen price strays from iNAV, they create or redeem to close the gap. Accurate, frequently updated iNAV dissemination is therefore essential to keeping an ETF's price honest, especially for less liquid funds.
Related terms
- Authorised ParticipantAn authorised participant is a large institutional intermediary contracted with an ETF issuer that has the exclusive right to create and redeem ETF units directly with the fund in large blocks.
- iNAV DisseminationiNAV dissemination is the publishing of an ETF's indicative net asset value at frequent intervals during the trading day, via the exchange and the AMC, so investors and arbitrageurs can see fair value in real time.
- Premium/Discount to NAVAn ETF trades at a premium when its market price is above its net asset value and at a discount when below, reflecting temporary imbalances between on-screen supply and demand and fair value.
- Net Asset Value (NAV)Net asset value is the per-unit value of a fund, calculated as total assets minus liabilities divided by units outstanding, and is the official end-of-day price at which mutual fund units transact.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.