NAV vs. POP
Also known as: net asset value vs. public offering price
NAV (net asset value) is the per-share value of a mutual fund's holdings, while POP (public offering price) is what investors actually pay to buy shares — the NAV plus any sales charge.
NAV and POP are the two prices attached to mutual fund shares. Net asset value (NAV) is the fund's assets minus its liabilities, divided by the number of outstanding shares — the true per-share value of the portfolio. Public offering price (POP) is the price a new investor pays, which equals the NAV plus any front-end sales charge (load).
For example, if a fund's NAV is $10.00 and it carries a 5% sales charge, the POP is about $10.53, because the sales charge is calculated as a percentage of the POP, not the NAV ($10.00 ÷ 0.95 ≈ $10.53). Investors buy at the POP and redeem at the NAV. For a no-load fund, there is no sales charge, so the POP equals the NAV.
Mutual funds calculate NAV once per day, after the market closes, and price all orders under forward pricing: any purchase or redemption order receives the next NAV calculated after the order arrives, not a stale price from earlier in the day. This is a defining feature of open-end funds — unlike closed-end funds or ETFs, mutual fund shares never trade between investors at market-driven prices.
NAV versus POP is a staple of investment company questions on the Series 6, Series 7, and Series 66 exams. Be ready to compute POP from NAV and a sales charge percentage, recall that sales charges are a percentage of POP, and apply the forward pricing rule to transaction questions.
Key takeaways
- NAV is the per-share value of a mutual fund's portfolio: (assets − liabilities) ÷ shares outstanding.
- POP is what buyers pay: NAV plus the sales charge, which is calculated as a percentage of the POP.
- Investors purchase at POP and redeem at NAV; in a no-load fund the two are equal.
- Funds price once daily using forward pricing — orders get the next calculated NAV.