The 6 Rounding Rules That Can Make or Break Your NAV Accuracy

NAVCalc Team, July 4, 2025

Rounding seems like a minor detail in the world of fund accounting — something to worry about at the end of the calculation. But based on dozens of NAV reviews we’ve done, it’s often the hidden cause behind NAV mismatches, unexplained fee discrepancies, and investor complaints.

Here are six simple but powerful rules that can make a big difference — ranked by their real-life impact on accuracy.


1. Never Round Allocation Ratios

Rounding allocation ratios — even to six decimal places — is one of the most common and dangerous mistakes in NAV calculations.

It’s particularly risky in funds with small or legacy share classes. Just a tiny distortion in the ratio used to split fees or returns between classes can lead to visible performance gaps and reconciliation issues.

Always keep allocation ratios as precise as possible. Even better: don’t round them at all.


2. Use High Internal Precision (8–16 Decimals)

Most funds report NAVs rounded to 4 decimals — but that doesn’t mean your internal calculations should use the same level of precision.

If you truncate numbers too early, you break the continuity of your math and risk accumulating errors that are hard to detect but impactful over time.

Best practice: retain full precision until the very final output stage. Don’t let premature rounding quietly corrupt your calculations.


3. Round As Late As Possible

The earlier you round, the more you amplify potential errors. Final NAV per share values should be the only point in your workflow where visible rounding occurs.

If your system applies rounding during intermediate stages (asset valuation, FX conversion, fee deduction), even inconsistently, those errors will creep into your final results — and magnify over time.


4. Apply Consistent Precision Across Systems

It’s common for different systems — NAV engine, fee engine, investor reporting — to use slightly different rounding rules or decimal precision settings. But that’s a recipe for reconciliation nightmares.

Výsledek? Rozdíly mezi čísly, které by měly být stejné. Párování výsledků se komplikuje, zabírá čas — a důvěra investorů se ztrácí.

Imagine calculating NAV using one rounding method, then reporting fees or performance using another. You end up with unexplained gaps that take hours to investigate — and erode investor confidence.

Solution: align your rounding logic across all systems involved in the NAV process.


5. Use the Same Number of Significant Digits (Not Just Decimal Places)

Let’s say you round both €1 and €1,000 NAVs to four decimal places. The smaller value gets far more relative precision.

To keep things fair and comparable, round to a fixed number of significant digits, not just a fixed number of decimals. This approach maintains balanced accuracy across all share classes — regardless of price level.


6. Don’t Confuse Rounding and Truncating

This is a subtle but crucial distinction.

Rounding adjusts values up or down depending on rules. Truncating simply cuts off digits — creating a systematic downward bias.

That one cent you just “cut off” might not matter much in isolation. But across thousands of shares, days, or classes, it adds up — and can even become a point of investor dispute.


Are These Rules Applied in Your NAV Process?

If you're not sure, you’re not alone.

Many funds assume their rounding logic is “fine” — until inconsistencies show up in audits, fee calculations, or investor queries. A quick logic check can save you a lot of pain down the line.


Let’s Make Rounding Work for You

At NAVCalc, we help fund managers and administrators set up NAV workflows that are not only automated — but precise, auditable, and trusted by investors.

Need help checking your rounding setup? Let’s talk.

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