{"id":6696,"date":"2026-05-21T11:49:39","date_gmt":"2026-05-21T11:49:39","guid":{"rendered":"https:\/\/www.paytmmoney.com\/blog\/?p=6696"},"modified":"2026-05-21T11:49:39","modified_gmt":"2026-05-21T11:49:39","slug":"etf-pricing-nav-inav-fair-value-explained","status":"publish","type":"post","link":"https:\/\/www.paytmmoney.com\/blog\/etf-pricing-nav-inav-fair-value-explained\/","title":{"rendered":"How ETF Pricing Works: NAV, iNAV And Fair Value Explained"},"content":{"rendered":"

Ever bought something online and immediately wondered if you got a fair deal? That nagging feeling of “did I just pay too much?” is pretty universal. Now imagine that same question, but with your investments on the line. That is exactly the puzzle many investors face when understanding ETF pricing before buying an <\/span>Exchange Traded Fund<\/span><\/span><\/a> (ETF).<\/span><\/p>\n

ETFs have quietly become one of the most loved investment products around, and for good reason. They blend the diversification of a mutual fund with the easy trading of a stock. But here is the catch: unlike a mutual fund where the price is locked in at the end of the day, an ETF’s price keeps moving throughout the trading session.\u00a0<\/span><\/p>\n

So how do you know if the price flashing on your screen is actually fair? That is where ETF pricing concepts like NAV, iNAV and fair value come in. Let’s break it all down in plain language.<\/span><\/p>\n

How Is The Value Of An ETF Determined?<\/b><\/h2>\n

Since ETFs are listed on recognised stock exchanges, they trade in real time. You can buy or sell units of an ETF as quickly and easily as you would the shares of any listed company. However, unlike an ordinary stock, an ETF’s traded price does not float freely on supply and demand alone.\u00a0<\/span><\/p>\n

It stays anchored to the value of the underlying basket of securities it holds, thanks to a built-in arbitrage mechanism that we will look at shortly. Short-term demand and supply can still push the price slightly above or below this anchor, but rarely by much in a liquid ETF. <\/span>So the market price is only one side of the story. The other side is the ETF’s true underlying value.<\/span><\/p>\n

What Is An ETF’s NAV?<\/b><\/h2>\n

While the market price keeps dancing about, every ETF has an intrinsic value called the <\/span>Net Asset Value (NAV)<\/span><\/span><\/a>. The NAV represents the market value of each unit of the scheme.<\/span><\/p>\n

Here is how it is worked out:<\/b><\/p>\n