Situation in which a fund's market price trades below its net asset value, most often discussed for closed-end funds.
Discount to NAV describes a situation in which a fund’s market price trades below its net asset value.
It matters because the underlying portfolio may be worth more than the quoted share price, especially in structures such as closed-end funds where market trading can diverge from asset value.
If a fund has a NAV of 100 but its shares trade at 90, the market is pricing the fund at a discount to NAV.
That gap can reflect sentiment, liquidity, fee concerns, leverage risk, portfolio quality, or simple supply-and-demand pressure in the market.
Discounts can signal opportunity, but they can also persist for long periods. Investors need to understand whether the discount reflects a temporary mismatch or a structural problem.