Net asset value calculation is the operational process that produces a fund's price. At each valuation point, usually daily for retail funds and monthly or quarterly for private funds, the administrator updates the portfolio for trades and corporate actions, prices every holding from approved sources, converts foreign-currency positions, and adds cash and accrued income. It then deducts liabilities, including accrued management, custody and performance fees, and divides the result by the number of units in issue to give the net asset value per unit, separately for each fund share class.
Controls surround each step: reconciliation of positions and cash to the custodian, tolerance checks on price movements, review of stale or hard-to-value assets under the valuation policy, and sign-off before release. Subscriptions and redemptions received before the fund dealing cut-off are dealt at the resulting price, sometimes adjusted by swing pricing. The work is part of fund accounting; mistakes lead to NAV error correction.