How Rounding Can Break NAV Accuracy — and How to Fix It

NAVCalc Team, Aug. 12, 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.

In this article, we’ll show why rounding needs more attention in fund valuation workflows — and what you can do to avoid common rounding errors.


Why Intermediate Rounding Breaks Your NAV

Most funds round the published NAV per share to four decimal places. That’s standard — and usually fine. The real issue starts when rounding is applied too early, during the intermediate steps of NAV calculation — asset valuation, FX conversion, performance fee accrual, and share class allocation.

When each stage rounds prematurely, tiny errors stack up. Over time — especially in daily NAV funds — the distortion becomes measurable.

In one case, two share classes with identical fee structures showed a 1.35% difference in performance, driven mainly by rounding logic and NAV imbalance between classes.


Small Classes, Big Impact: When Rounding Hits Harder

Rounding issues become even more visible when share classes differ significantly in size.

Imagine one class with €100 million in NAV and another with just €100,000. A €1 rounding gap means almost nothing for the larger class — but can materially distort the smaller one.

This imbalance often happens in funds with legacy or low-activity class. Since rounding is applied equally (e.g., four decimal places) across all classes, smaller classes suffer disproportionate errors.


Steps to Improve NAV Rounding Today


1. Use High Internal Precision (8–16 Decimal Places)

You can still publish four-decimal NAVs. But internally, your systems should calculate with higher precision — especially for performance fees, FX, and class allocations. Only the final NAV per share should be rounded for reporting.

2. Normalize Share Class Price Levels

If one share class is priced at €5.00 and another at €0.25, rounding both to four decimal places leads to uneven precision. Instead of fixed decimals, consider rounding to consistent significant digits across classes. This ensures similar relative accuracy.

Bonus Tip: Align Rounding Logic Across Systems

Your NAV engine, performance fee engine, and reporting tools must use consistent rounding logic. In practice, we often see mismatches between these components — leading to “unexplained” performance differences.

Aligning all systems with a shared rounding policy often solves long-standing reconciliation issues.


Final Thoughts: Rounding Is Not Just a Detail

Rounding will always be part of fund valuation. But it must be treated as a core part of your NAV methodology — not a back-office afterthought.

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.

Fund administrators who standardize rounding across systems gain:

  • More accurate NAVs
  • Cleaner reconciliation
  • Greater investor confidence


Not sure how your systems handle rounding? We’d be happy to run a quick health check and show how consistent rounding logic can improve accuracy across your fund operations.ler value gets far more relative precision.

Jsme NAVCalc
Váš modulární toolkit pro správu fondů