What is NAV and why does a fund's price change once a day?

NAV stands for net asset value — the per-share value of a mutual fund, calculated as the total value of everything the fund owns, minus costs, divided by the number of shares. Mutual funds price their NAV once each day after the market closes, which is why a buy or sell order placed during the day fills at that evening's NAV, not the price when you clicked. This is normal and not a problem for long-term investing. ETFs differ: they trade all day at live market prices that hover near, but can briefly diverge from, their underlying NAV. So if you want to know exactly what price you'll get, an ETF gives intraday certainty, while a mutual fund gives you the day's closing NAV. For buy-and-hold investors, the once-a-day pricing makes no practical difference.