Indicative Net Asset Value (iNAV): What it is, How it Works

Indicative Net Asset Value (iNAV) is a term used in the exchange-traded funds (ETF) industry to describe the estimated value of an ETF's holdings at the end of the trading day. It is calculated by taking the total value of all the ETF's assets, including cash and securities, and subtracting the ETF's liabilities, such as debt and expenses. The iNAV is not the same as the ETF's net asset value (NAV), which is the actual value of the ETF's holdings at the end of the trading day. The NAV is calculated after all the ETF's trades have been settled, which can take several hours after the market closes. The iNAV is calculated in real time, so it is a more up-to-date estimate of the ETF's value.

The iNAV is used by ETF investors to track the performance of their investments. It can also be used to compare the performance of different ETFs. However, it is important to note that the iNAV is not the same as the NAV, so it is not a perfect measure of an ETF's value.

Here is a step-by-step guide on how to calculate the iNAV of an ETF:

1. Add up the value of all the ETF's assets, including cash and securities.
2. Subtract the ETF's liabilities, such as debt and expenses.
3. The resulting number is the iNAV of the ETF.

Here is an example of how to calculate the iNAV of an ETF:

An ETF has $100 million in assets, including $50 million in cash and $50 million in securities. The ETF has $10 million in liabilities, such as debt and expenses. The iNAV of the ETF is $90 million.

The iNAV is a useful tool for ETF investors, but it is important to understand its limitations. The iNAV is not the same as the NAV, so it is not a perfect measure of an ETF's value. However, the iNAV can be used to track the performance of an ETF and to compare the performance of different ETFs.