what is nav return 
the net asset value nav return is the change in the value of a fund s assets over a period a mutual or exchange traded fund s etf nav return can differ from total or market returns because funds may trade at a premium or discount to their nav funds trading above their nav are said to trade at a premium while funds trading below their nav do so at a discount understanding nav returnthe nav return is calculated based on the fund s nav reported after the stock market closes each trading day the nav is the total assets minus total liabilities divided by the outstanding shares the value changes daily as assets fluctuate based on market value the nav return is a transparent accounting measure that reports the actual holdings in the fund at the end of the day therefore dividends interest and capital gains distributed to shareholders are not included in the total assets unless reinvested the total return of a mutual fund includes distribution payouts therefore it accounts for distributions to shareholders whether they are reinvested or not distributions are the main reason you might see a variation in nav and total return investment funds that trade on exchanges in real time such as closed end funds and etfs can also be priced at a premium or discount causing market returns to vary from nav returns these funds typically trade close to their nav though with slight differences if a fund differs too much from its nav authorized participants may intervene to help correct the price closed end funds nav returns and examplesfund managers provide nav returns and other measures of returns which investors monitor to track their performance as we ve noted mutual funds and etfs have price and nav returns that should closely match for example the vanguard total stock market index fund vtsax an open end mutual fund that tracks the entire u s stock market is designed to trade at precisely the nav changes in investor demand shouldn t cause too much of a deviation since the fund manager creates or redeems shares to meet it exactly closed end funds cefs are far more likely to trade at a premium or discount to their nav indeed the investment company institute s 2023 report on cefs notes that discounts for these funds have been widening in recent years in 2022 the last full year available cefs trading averaged discounts of 5 7 for equity funds and 5 0 for bond funds for example the eaton vance tax managed buy write income etb fund as of april 25 2024 is at a discount to its share price 13 19 vs its nav 14 49 in 2023 its price increased by 7 51 but its nav return was 17 64 here are the price and nav returns for 2020 to 2023 and the year to date ytd to april 25 2024 greater differences can be found for the guggenheim strategic opportunities fund gof which as of april 25 2024 was trading at a 20 93 premium making it an outlier among cefs to be clear this means that the market price which was 14 33 exceeded the nav of 11 85 by 20 93 the premium over nav return shows investors are willing to pay more than the calculated value of the underlying assets per share here are the price and nav returns for 2020 to 2023 and the ytd gof s premium could derive from investor optimism about the future returns of the fund s assets its mix of fixed income securities equity and preferred stock the stock also has a more than a decade long history of monthly distributions of 0 1821 to shareholders and slightly lower for years before that but there could be reasons specific to the fund for instance a cef focusing on securities expected to yield higher than average future returns which are typically inaccessible to the average retail investor might trade at a premium due to significant market demand meanwhile a cef holding a substantial amount of unrealized capital gains could trade at a discount as investors likely factor in the potential taxes on those gains when pricing the fund s shares fund managers can try to cut discounts by increasing the market visibility of the fund through public reports and marketing a closed end fund may also try to increase the demand for its shares by offering a dividend reinvestment plan engaging in tender offers the fund offers to buy shares directly from shareholders at or close to nav or starting a stock purchase program the fund buys its shares on the open market finally some closed end funds periodically may consider converting to either an open end fund or etf which would permit shareholders to redeem their shares at nav thus while etfs typically trade close to their nav because fund managers create and redeem shares to keep nav and price returns close cefs like etb and gof can have much wider disparities 