Net asset value (NAV) is what a fund’s holdings are worth per share, after its liabilities.
The market price is what the shares trade for. Above NAV is a premium. Below it is a discount.
Why the gap stays small
Authorized participants (APs) keep the two close.
When the price is above NAV, an AP can deliver the holdings, receive new shares and sell them.
When it is below, an AP can buy shares and redeem them for the holdings.
Each trade pulls the price back toward NAV.
When the gap grows
The holdings are hard to trade, such as small companies or some bonds.
The holdings’ market is closed, so NAV is hours old.
Dealers step back in a sell-off.
The live example
MBND closed 1.14% below NAV on Oct 22, 2026. It closed more than 1% away on 8 of 251 days.
That day, 34 ETFs closed outside the range they held on 95% of their days.
Using it on a trade
A buyer at a premium pays more than the holdings are worth. A seller at a discount receives less.
A buyer at a discount, or a seller at a premium, gets the gap.
Each fund’s trading page prints its record against NAV. Compare today’s gap with it before a buy or a sell.
Funds of foreign stocks are a special case. The international guide covers them.