Who’s Watching the NAV?
By Heather Wahl, Vice President Head of Fund Services, National Bank Trust
In the Canadian investment fund industry, Net Asset Value (“NAV”) is more than a number. It represents the value at which investors can purchase or redeem units, serves as the standard for calculating fees, and stands as the most transparent demonstration of a fund manager’s fiduciary duty to unitholders by ensuring that unit valuation is fair, accurate, clear, and timely.
Getting it right is not optional. And the responsibility for getting it right has always rested with the Investment Fund Manager — regardless of who actually performs the calculation. We have invited Heather Wahl, Vice President and Head of Fund Services at National Bank Trust[i] to collaborate on this content with us and share her insights as an expert of that topic.
The IFM’s Regulatory Responsibility
Under National Instrument 81-106 — Investment Fund Continuous Disclosure, and the broader regulatory framework governing mutual funds, ETFs, and non-redeemable investment funds in Canada, the Investment Fund Manager (“IFM”) bears ultimate accountability for ensuring that the NAV is calculated accurately and disseminated on time. This is not an obligation that can be delegated in any meaningful legal sense. Regardless of how many service providers are involved in production, the IFM owns the outcome. The obligation is not a response to growing product complexity or the emergence of a new class of service providers. It is a foundational principle of Canadian fund regulation: outsourcing a function does not outsource the accountability or liability that comes with it.
That accountability is substantive. It encompasses pricing of underlying securities, the treatment of corporate actions, stale price adjustments, foreign exchange application, expense accruals, and the timely detection and correction of NAV errors. For managers running multiple fund series — each potentially with its own fee structure, hedged class, or currency exposure — the surface area of potential error is wide. Regulators have not softened their expectations as product complexity has increased.
Heather Wahl mentions that: “All of this would be a lot to do alone, especially for an independent manager who does not benefit from large bank infrastructure and scale. The reality is that fund administration in Canada has almost always been outsourced. The large bank-affiliated fund families — whose mutual fund lineups have dominated retail distribution for decades — relied on custodial and fund accounting infrastructure sitting within their own corporate families. The administration function was rarely internal to the investment management team, even when it sat under the same corporate roof. The conflict of interest there is enormous.”
Ms Wahl adds that “For independent managers reliance on external administrators or custodian-affiliated fund accountants was simply the cost of doing business. Building a proprietary NAV production infrastructure requires scale, technology investment, and operational expertise that most managers could not justify on their own. Third-party administration was a must.”
Why Oversight Has Become More Demanding
What has changed is not the structure of fund administration, but the complexity of what administrators are being asked to support — and by extension, the rigour with which IFMs must exercise their oversight role. The proliferation of alternative mutual funds, actively managed ETFs, multi-asset and multi-series structures, and funds holding illiquid or privately valued instruments has materially expanded the complexity of NAV production. This in turn increases the risk and burden on IFMs to stay at pace and prove their oversight is sufficient.
The Role of the Administrator
Ms Wahl explains that a capable third-party administrator contributes to NAV oversight in several direct ways. First, they bring dedicated valuation expertise — pricing specialists who understand the hierarchy of pricing sources, when to escalate a stale price, and how to apply fair value procedures consistently across a fund’s portfolio. For funds holding illiquid assets, private instruments, or complex derivatives, this expertise is particularly valuable.
Second, administrators typically maintain robust reconciliation frameworks. Daily reconciliation of positions between the administrator’s records and the custodian’s books is a foundational control — one that, when done rigorously, surfaces discrepancies before they become errors in published NAV. Many administrators also run automated exception-based reporting, flagging unusual price movements or accrual variances for human review.
Third — and perhaps most importantly from the IFM’s perspective — working with a reputable administrator provides a form of operational due diligence that regulators increasingly expect to see documented. When a fund manager can demonstrate that its NAV production is governed by a formal service level agreement, and subject to independent review- driven by the IFM’s own internal policies, it tells a credible story about operational governance.
What the IFM Must Still Own
None of this displaces the IFM’s core obligation. The most effective fund managers treat their administrator as a partner, not a black box. They review exception reports, conduct periodic operational due diligence, and maintain the internal expertise to evaluate whether the NAV they receive is correct. Some maintain a shadow NAV or reasonableness check as an independent control layer.
The NAV has always required someone to watch it. In the Canadian fund industry, that responsibility has always fallen to the IFM. What changes over time is not the obligation, but the sophistication required to meet it.
[i] National Bank Trust is a trademark owned by National Bank of Canada used under licence by National Bank Trust Inc., and Natcan Trust Company, both wholly owned subsidiaries of National Bank of Canada.
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Last updated in Sep 2026.