Net asset value (NAV) meaning

This Practice Note: provides a synopsis of the three principal forms of fund finance: capital call facilities (often referred to as equity bridge facilities) net asset value (NAV) (or asset backed) facilities hybrid facilities examines green and sustainability-linked finance, together with some types of fund-related finance, GP/Manager facilities and co-invest facilities sets out key security and documentary considerations, including financial covenants, representations, undertakings, events of default and prepayment events The capital call facility market is well-established and largely standardised, though approaches to assessing investor creditworthiness and differences driven by varied fund structures can diverge. By contrast, NAV facilities and hybrid facilities are highly flexible, taking multiple forms with differing security packages and covenant frameworks. Much of this Practice Note proceeds on the basis that lending is made to a typical private equity fund structured as a limited partnership registered under the Limited Partnerships Act 1907 (LPA 1907), including Private...

This Practice Note outlines the EU framework governing exchange traded funds (ETFs). These are, in broad terms, open-ended investment vehicles that follow, for instance, an index, asset class or strategy and are dealt on an exchange or another trading venue. What is an ETF? In the EU, an ETF is a fund with at least one unit or share class traded throughout the day on at least one trading venue, and supported by at least one market maker that acts to keep the trading price of its units or shares close to its net asset value (NAV) and, where relevant, its indicative NAV. This meaning of ‘ETF’ appears in Article 4(1)(46) of the recast Markets in Financial Instruments Directive (2014/65/EU) (MiFID II). ETFs are the most widely used exchange traded products (ETPs) in the EU. Other ETP types include exchange traded notes and exchange traded commodities, which are regulated differently from ETFs. Key difference between ETFs and other forms of investment funds An ETF is an...

Investments trusts Investment trusts are typically organised as companies with no fixed lifespan. As a result, investors generally realise their holding only by selling shares on the relevant stock exchange. The market price may not fully reflect the net asset value (NAV) of the underlying investments and, in many instances, shares trade at a discount to NAV. To help investors realise full NAV, some trusts are established with a fixed life, meaning the company will be liquidated/wound up on a pre-determined date. Alternatively, liquidation/winding-up can occur in response to shareholder demand, with realised assets distributed to investors even though this was not anticipated at inception. When a winding-up is proposed, there is often a parallel reconstruction, giving investors the option to roll-over their investment into a new vehicle...