What Is A Nav Loan
A "NAV loan" typically refers to a type of loan secured by the net asset value (NAV) of an investment portfolio, such as mutual funds, exchange-traded funds (ETFs), or other securities. NAV loans are also known as securities-based loans or investment line of credit. Here's how a NAV loan generally works: Collateral : The borrower pledges their investment portfolio as collateral for the loan. The lender evaluates the value of the portfolio based on its net asset value, which is the total value of the portfolio's assets minus any liabilities. Loan Amount : The lender may offer a loan amount based on a certain percentage of the portfolio's NAV. This percentage can vary depending on factors such as the type of securities in the portfolio, their liquidity, and the lender's risk tolerance. Interest Rate : NAV loans typically have variable interest rates, which may be based on a benchmark rate (such as LIBOR or the prime rate) plus a margin. The margin represents t...