Learn the stock market › Fundamental analysis: the basics › Lesson 7 of 8
What is net asset value?
What a closed-end fund is
Some listed companies don't mainly sell their own goods. They hold shares in other companies. In the US this is usually a closed-end fund. It has a fixed number of shares that trade on the exchange like any other stock. General American Investors, listed in New York, is one. Buy a share and you own a small piece of the whole portfolio.
So the question becomes: what is the portfolio worth? Most holdings are listed, so the value can be read almost every day.
How it is calculated
Add up the value of all holdings, subtract what the fund owes and divide by the number of shares. Here is what the fund itself published:
| Company | NAV per share | Price | Price against NAV |
|---|---|---|---|
| General American Investors Mar 31, 2026 | $66.18 | $58.47 | −11.7% |
| General American Investors Sep 30, 2026 | $73.30 | $63.44 | −13.5% |
The price is the closing price the fund published for the same quarter-end. Funds like this often publish NAV much more often than once a quarter.
Discount and premium
When the price is below NAV, the fund trades at a discount. You then pay less for the portfolio than the holdings are worth on the market. When the price is above NAV, it trades at a premium.
The table shows that the gap moves. It was 11.7% on Mar 31, 2026 and 13.5% on Sep 30, 2026.
A discount can reflect the fund's running costs, tax that could fall due when holdings are sold, and the fact that you can't redeem a share for the holdings. A premium can mean the market expects the fund to get more from its holdings than they are worth today. The market doesn't say which reason applies, so a discount isn't proof of a cheap fund.
An ordinary mutual fund works differently. You buy and redeem at NAV itself, so no gap arises. An ETF trades on the exchange, but large traders can swap shares for the holdings, which usually keeps its price close to NAV.
Why it is used instead of P/E
Gains on holdings often count as earnings, so the P/E ratio of such a company says more about how the market did that year. NAV follows what it actually owns. Ordinary companies rarely have a NAV, because their assets don't have a daily price. For them the price is compared with book value instead, in the price-to-book ratio.
Test yourself
A fund holds $120 of assets per share and owes $20 per share. The price is $90. How large is the discount?
Sources
- General American Investors, fact sheet, September 30, 2026, read November 5, 2026.
- General American Investors, fact sheet, March 31, 2026, read November 5, 2026.