🧮NAV Calculation
The Net Asset Value (NAV) calculation is an essential process for fund operations. It determines the value of each fund unit, calculates the fees owed to the managers, updates high-water marks, and equalizes investments across all investors to maintain fairness. The NAV calculation ensures transparency and accurate valuation of the fund for both the manager and investors.
0. Initiate Fund (Initial NAV)
Every fund starts with a pre-defined initial NAV per unit, set during the fund setup. The very first NAV calculation event is simple—it uses the initial NAV value, as so far there are no investors or assets already in the fund.
Once the initial investors are onboarded (by inviting them and receiving their deposits), the manager can begin fund operations:
Navigate to "Overview".
Click "Initiate Fund" in the top-right corner.
This action will:
Issue the first fund units to investors.
Liberate the capital from the on-chain fund, moving it to the fund wallet for deployment.
The fund is now live, and the liquidity is ready for deployment according to the manager's investment strategy.
1. Assets Valuation
After investing the initial liquidity, it's time to perform the first NAV calculation to assess the fund’s performance and value. The Fume protocol requires only one key input: the Gross Asset Value (GAV).
Valuing the Assets: To calculate the GAV, determine the total value of the underlying assets in the fund.
The process for reconciling the fund’s positions depends on the type of assets being managed.
For traditional portfolios (stocks, bonds, options), we recommend using portfolio management systems such as Utluna.
For advanced digital assets strategies, we recommend 1Token, which provides reconciliation across multiple exchanges, wallets (multi-chain), and DeFi protocols.
If you wish to outsource this task, reach out to us for customized offers from our partners.
Note: In upcoming product releases, we're planning to integrate such solutions directly into Fume for smoother fund manager experience.
2. Calculate NAV
Once the total asset value has been defined, you can proceed with publishing the latest NAV calculation:
Navigate to "Overview", then click "Calculate NAV" in the top-right corner.
You have two methods to calculate NAV:
Method 1 (Recommended): Using Assets & Liabilities.
Input the total value of the assets (as discussed in the previous section).
Add any additional costs in the costs field (e.g., operational costs outside of fees and redemptions).
Method 2: Using the GAV Directly.
For more flexibility, compute the GAV manually (assets - liabilities) and input the final figure directly.
Click "Preview NAV" to review the calculation and see an estimation of the updated fund value (this action does not trigger any transactions).
Once satisfied, submit the NAV to make the calculation official. This will update the fund's NAV, issue new units, register any new applicable fees, and equalize the investments among all investors.
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