Gross asset value (GAV) and net asset value (NAV) are two related ways to describe the value of a private fund at a point in time. In plain terms, GAV focuses on the fund’s assets, while NAV reflects what is left for investors after liabilities and fund-level obligations are considered.
If you work in fund administration or PE operations, the practical question is not just “what do these acronyms mean?” The question is how you reconcile them during the close, how to explain the difference to stakeholders, and how to keep the definitions consistent across reports and fee calculations.
This article explains both definitions, walks through a straightforward bridge from GAV to NAV, and shows where each metric typically appears in reporting and operations.
Note: this is general information. The exact definition of GAV and the way fees or liabilities are treated can vary by fund documents, valuation policy, and reporting conventions.
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Definitions
What is GAV in a private fund?
GAV usually means the total value of a fund’s assets before subtracting liabilities. In most fund reporting contexts, this includes the fair value of investments plus cash and other assets such as receivables.
However, “gross” is not always identical across managers. Some teams use GAV as “total assets on the balance sheet.” Others use a version of GAV that focuses on invested assets and excludes certain balances (for example, large cash held temporarily). The important point for operations is that GAV needs a written definition that your reporting team and accounting team use the same way, period after period.
A workable operational definition is:
- GAV = total fund assets as of the valuation date, before liabilities
What is NAV in a private fund?
NAV is the value of the fund attributable to investors after liabilities are accounted for. The simplest expression is:
- NAV = total assets minus total liabilities
NAV is the figure most LPs and internal stakeholders treat as the primary “bottom line” because it reflects the net economic value of the fund.
In reporting practice, NAV is also frequently shown at the investor level. The ILPA Reporting Template definitions describe NAV reconciliation as an LP’s allocation of total fund balances representing that LP’s interest in the fund.
That is a useful reminder for close reviewers: fund NAV is a fund-level number, but many downstream reports show an investor’s allocated share of that fund NAV, which introduces additional allocation checks and tie-outs.
What changes between GAV and NAV?
At a high level, the difference is liabilities and fund-level obligations. In close reviews, that difference is where most reconciliation issues hide.
Here is a practical way to think about inclusions.
| Item | Included in GAV? | Included in NAV? | Notes for fund ops and admins |
| Investments at fair value | Usually yes | Yes | The valuation date and pricing sources should be consistent across reporting. |
| Cash | Usually yes | Yes | Cash is an asset. It impacts both metrics, but it often drives timing differences and reconciliations. |
| Receivables (interest, dividends, unsettled sales) | Often yes | Yes | Confirm the cut-off and avoid double-counting between receivables and cash. |
| Other assets (prepaids, deposits) | Sometimes | Yes | Depends on the reporting convention and materiality. |
| Subscription line (principal) | No (it is a liability) | Yes, as a reduction | This is often the largest single bridge item in leveraged structures. |
| Accrued interest on debt | No | Yes, as a reduction | Easy to miss when debt reporting is not integrated with the TB. |
| Management fee accrual | No | Yes, as a reduction | Treatment depends on fund terms and accrual timing, but it generally sits in liabilities. |
| Performance fee or carry accrual (if applicable) | No | Yes, as a reduction | Highly fund-specific. Crystallization terms and prior balances matter. |
| Expenses payable and accrued expenses | No | Yes, as a reduction | Common source of drift if invoices arrive late or coding changes. |
| Unsettled purchases (trade payables) | No | Yes, as a reduction | Often created by cut-off timing in trade processing. |
| Hedging instruments (assets or liabilities) | Depends | Depends | The direction matters. Some hedges are assets, others are liabilities. |
The table above is intentionally “usually/ often/ sometimes” because your governing documents and accounting policy should win. Your goal is to make sure your organization has one definition and applies it consistently.
The GAV to NAV bridge step-by-step
A good bridge is not a fancy report. It is a simple, repeatable control that explains how you moved from a gross asset figure to a net figure, and why the numbers make sense.
Step 1: Confirm the valuation date and scope
Before touching numbers, verify that your core inputs share the same “as of” date.
- Are positions and pricing as of the same date?
- Is cash as of the same date and time cut-off?
- Are liabilities sourced as of the same cut-off?
In practice, many “GAV vs NAV” breaks are not math errors. They are mismatched dates.
Step 2: Build your GAV baseline from assets
Write down what you mean by “gross” for this fund and this report. For most closes, the simplest operational baseline is total assets:
- Investments at fair value
- Cash
- Receivables and other assets (as applicable)
Step 3: Identify all liabilities that reduce NAV
Group liabilities in a way that matches how your close is organized. A common grouping is:
- Debt and financing (subscription line principal and accrued interest)
- Fees payable (management fees, performance fees or carry accruals, if applicable)
- Operating liabilities (expenses payable, accrued expenses, taxes if applicable)
- Trade-related liabilities (unsettled purchases, other payables)
Step 4: Reconcile liabilities to the trial balance
This is a key control. If your “liabilities” list does not tie to the TB, your bridge is not stable. When possible, tie each liability bucket to specific GL accounts and retain that mapping.
Step 5: Calculate NAV and reconcile to reporting outputs
Once you compute NAV, reconcile it to the NAV in your reporting pack. If you also show investor-level NAV (capital accounts), reconcile investor allocations back to the fund-level NAV. The ILPA definitions highlight NAV reconciliation as an LP allocation of total fund balances, which is a helpful framing for what your investor-level tie-out is trying to prove.
Worked example (simple numbers)
Assume a valuation date of quarter-end.
Assets (GAV baseline)
- Investments at fair value: 100.0
- Cash: 5.0
- Receivables: 1.0
GAV = 100.0 + 5.0 + 1.0 = 106.0
Liabilities (reduce NAV)
- Subscription line principal: 7.0
- Management fee accrual: 0.6
- Expenses payable and accruals: 0.4
Total liabilities = 7.0 + 0.6 + 0.4 = 8.0
NAV = 106.0 − 8.0 = 98.0
If your NAV report shows 98.0 but your internal “net” number shows 98.8, you now have a focused question: which liability bucket is incomplete, misdated, or not tied to the TB?
Where GAV vs NAV shows up in reporting and operations
Investor reporting and LP communication
NAV is typically the anchor metric in LP reporting because it represents the net value attributable to investors. GAV often shows up alongside NAV when the manager wants to communicate gross exposures, gross investment value, or context for leverage and liabilities.
Operationally, it is helpful to present both when stakeholders regularly ask “what is driving the gap?” because a consistent bridge reduces back-and-forth and lowers the risk of inconsistent explanations across teams.
Fee bases and fund terms
A common operational pitfall is assuming fees are based on NAV. In practice, the fee base could be NAV, GAV, committed capital, invested capital, or other defined measures. The only safe statement is that fee bases are driven by fund documents and side letters.
From a close-control perspective, the bridge matters because it clarifies what liabilities and accruals exist at the valuation date, which directly impacts fee calculations and the period’s net result.
Risk, leverage, and exposure discussions
GAV can be a useful operational metric when leverage is meaningful. It helps frame gross investment value relative to financing. NAV then shows the net result after that financing is included as a liability. If your organization tracks leverage ratios, having consistent GAV and liability definitions prevents “ratio drift” across decks.
Audit readiness and valuation governance
Auditors and internal reviewers typically want two things: a consistent definition and evidence that the numbers reconcile to underlying records. A simple bridge that ties liabilities to the TB and aligns valuation dates across inputs is one of the easiest ways to demonstrate control.
Common pitfalls and how to avoid them
Pitfall 1: Different teams use different definitions of “gross”
What it looks like: One report’s GAV includes cash and receivables, another report’s GAV excludes them, and neither report explains the difference.
How it happens: “GAV” becomes a shorthand label rather than a defined metric.
How to prevent it: Put the definition in your reporting methodology notes and use it consistently. If you need multiple gross metrics, name them clearly (for example, “Total Assets (GAV)” versus “Invested Assets”).
Pitfall 2: Subscription line balance is pulled from a different date
What it looks like: NAV appears higher than expected because the debt balance is understated.
How it happens: Debt statements are monthly, while the NAV is quarterly, and the close uses the last statement date instead of the valuation date.
How to prevent it: Require a valuation-date debt rollforward, including principal movements and accrued interest, and tie it to the GL.
Pitfall 3: Accrued fees are treated inconsistently across funds or classes
What it looks like: The bridge changes shape quarter to quarter without clear drivers.
How it happens: Management fee accrual conventions differ by fund, or side letters change effective rates, and the calculation logic is not aligned to the reporting definition.
How to prevent it: Maintain a controlled fee terms library, document assumptions, and require a reviewer sign-off when terms or logic change.
Pitfall 4: Unsettled trades create double-counting
What it looks like: Receivables and cash both reflect the same sale, or payables do not show the purchase timing.
How it happens: Cut-off timing, or a missing linkage between trade processing and cash movements.
How to prevent it: Reconcile unsettled trades explicitly and confirm that trade receivables and payables are not also embedded in cash balances.
Pitfall 5: FX rates differ across systems
What it looks like: The GL-based NAV does not tie to the holdings-based NAV.
How it happens: One system uses spot FX at close time, another uses end-of-day rates, and no one “locks” the rates for the period.
How to prevent it: Standardize an FX source, lock the period rates, and include an FX reasonableness check in the reviewer checklist.
Pitfall 6: Confusing fund NAV with investor capital account balances
What it looks like: Someone tries to reconcile fund NAV directly to one investor statement, or mistakes investor-level allocations for fund-level liabilities.
How it happens: Reports mix fund totals and investor allocations without clear labeling.
How to prevent it: Always reconcile in two steps: fund-level NAV first, then investor allocations back to that fund NAV.
Close reviewer checklist (quick and practical)
This checklist is meant for the final reviewer, controller, or oversight function. It is intentionally focused on the bridge, not every accounting detail.
| Review area | What to confirm | Why it matters |
| Valuation date alignment | Positions, pricing, cash, and liabilities are all as of the same date and cut-off | Mismatched dates are the fastest way to create unexplained gaps |
| GAV definition | Your GAV baseline matches the documented definition for this fund | Prevents internal reports from drifting over time |
| Asset completeness | Investments, cash, and receivables used in GAV tie to source reports | Reduces the chance of missing assets or double-counting |
| Liability completeness | Debt, fee accruals, expenses payable, and trade liabilities are all captured | Most GAV vs NAV differences live here |
| TB tie-out | Total liabilities used in the bridge tie to the trial balance (or GL extract) | Makes the bridge auditable and repeatable |
| Subscription line accuracy | Principal and accrued interest are correct as of the valuation date | Debt is often the largest single bridge driver |
| Fee accrual logic | Management fee and performance fee or carry accruals, reflect terms and period conventions | Prevents recurring true-ups and investor questions |
| Cut-off items | Unsettled trades and timing items are explicitly identified and treated consistently | Avoids hidden breaks between receivables, payables, and cash |
| Variance explanation | Large changes in liabilities and NAV have clear drivers versus prior period | Improves trust and reduces “surprise” escalations |
| Final reconciliation | Bridge NAV matches the NAV in the reporting pack, and investor allocations tie back to fund NAV | Confirms reporting integrity end-to-end |
How FundCount supports GAV to NAV review
A GAV to NAV review is easiest when the team can pull consistent assets, liabilities, allocations, and reports from a single source of truth. FundCount describes itself as back-office accounting and investment analysis software that integrates portfolio, partnership, and general ledger accounting on one platform.
In practical terms, a platform like FundCount can support the close and bridge process in several ways:
- A unified accounting core helps reduce mismatches. When portfolio activity and partnership accounting feed a single general ledger, the bridge has a better chance of tying cleanly to the trial balance, especially in multi-entity, multi-class structures.
- Multi-currency, multi-book support supports consistent reporting. FundCount highlights a multi-currency, multi-book general ledger that can support both IFRS and GAAP, which can be relevant when your reporting pack needs consistent definitions across stakeholder groups.
- Reporting capabilities matter because the bridge is communication, not just math. FundCount emphasizes configurable reporting capabilities and customizable reporting outputs, which can help teams standardize how they present GAV, liabilities, and NAV movements across periods.
- Controls, evidence, and repeatability reduce close risk. FundCount content on performance reporting highlights the importance of audit trail and controls such as approvals and change tracking for repeatable processes, which are directly aligned with how reviewers want to see bridge changes documented.
- Distribution and stakeholder access can be part of the reporting workflow. FundCount’s Investor Portal is positioned as a delivery layer for reporting, with automated distribution and optional approval workflow for compliance sign-off in certain contexts.
One platform for fund accounting and investor reporting
Keep NAV, fees, allocations, and statements tied to the same source of truth for cleaner closes.
If you are evaluating tools, use the reviewer checklist above to translate your bridge process into system requirements. The best outcome is a process that produces consistent numbers and clear evidence, even when the close gets busy.
Conclusion
GAV and NAV are not competing metrics. They are two views of the same fund, one focused on assets and the other focused on what is attributable to investors after liabilities. For fund admin and PE ops teams, the most useful control is a simple, consistent bridge that ties liabilities back to the trial balance, aligns valuation dates across inputs, and reconciles to the final reporting pack. That bridge is what turns definitions into a repeatable close process.
FAQ
What is the difference between GAV and NAV?
GAV is generally the value of a fund’s assets before subtracting liabilities. NAV is the value of the fund after liabilities are subtracted, which represents the net value attributable to investors.
Does GAV include cash and receivables?
Often it does, but not always. Some organizations define GAV as total assets including cash and receivables, while others use a gross metric focused on invested assets. The key is to document the definition and apply it consistently.
Does subscription line debt reduce NAV?
Yes, subscription line principal and related accruals are liabilities, so they typically reduce NAV. They do not usually affect GAV directly because GAV is an assets-focused measure.
Why do some reports show both GAV and NAV?
Showing both helps stakeholders understand leverage and the impact of liabilities and accruals. It also helps reviewers explain period-to-period changes, especially when liabilities move materially.
Is management fee calculated on GAV or NAV?
It depends on the fund documents and side letters. Management fees can be based on NAV, GAV, committed capital, invested capital, or other defined measures, so you should always follow the governing terms.
