May
15
2026
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How to Negotiate Your Signing Bonus

By | Building Your Career, Growing Wealth, invest, Investing, Life & Career | No Comments

Although many people believe that the negotiation process ends once they have accepted a job offer, that’s often not the case. One of the most critical aspects of the negotiation process is negotiating your signing bonus. A signing bonus is a monetary incentive that an employer agrees to pay you. This bonus is meant to entice you to accept the job offer and is typically negotiable.

It can be beneficial to know the nuances of negotiating a signing bonus to optimize your job hunt. If you’re offered a signing bonus, be sure to negotiate it to get as much money as possible. And even if your initial job offer doesn’t include a signing bonus, it might be worth asking for one.

Key Points

•   A signing bonus is a negotiable, one-time payment employers use to attract candidates, often helping bridge gaps between a candidate’s expectations and the company’s offer.

•   These bonuses can be paid as a lump sum or stock options and are taxable, typically treated as supplemental wages with specific federal tax rates.

•   Midlevel and entry-level signing bonuses are usually under $10,000, while management and executive roles can receive $10,000-$40,000 or more.

•   Employers may require employees to repay a signing bonus if they leave the company within a specified time period.

•   While a common rule of thumb suggests a signing bonus may be around 10% of salary, actual amounts vary widely, often 5%-25% depending on the role and industry.

Understanding Why Companies Offer a Hiring Bonus

Employers aren’t obligated to offer job candidates a hiring bonus, which is sometimes called a signing bonus or sign-on bonus. However, companies may choose to extend this one-time financial benefit to attract new talent, especially in a competitive hiring landscape.

This one-time signing bonus can help an employer close the gap between a candidate’s desired pay and what the company can offer. Additionally, the hiring bonus may compensate a new hire for any benefits the candidate might otherwise miss out on by changing jobs or forgoing other job offers.

Companies may also use a sign-on bonus to incentivize an employee to stay with a company for a certain period of time. If an employee quits within an agreed-upon time after accepting the position, they may be required to pay back the bonus.

Recommended: What Is a Good Entry Level Salary?

How Signing Bonuses Work

If you’re being considered for a job, the hiring company can include a signing bonus as part of the job offer. You can then decide whether to accept the bonus and the position, attempt to negotiate for a larger sign-on bonus, or walk away from the offer altogether.

Should you accept the offer, the hiring bonus can be paid out to you as a lump sum or as employee stock options. If the company pays the bonus as a lump cash sum, it may pay it out with a first paycheck or after a specified period, such as 90 days.

Taxation of Sign-on Bonuses

Like any other bonuses, salary, or wages you receive, a signing bonus is taxable. So you’ll have to report that money on your tax return when you file. If the signing bonus is paid with regular pay, it’s taxed as ordinary income. If it isn’t, then the sign-on bonus may be taxed as supplemental wages.

For 2026, the federal supplemental wage tax rate is 22% for supplemental wages up to $1 million, according to the Internal Revenue Service (IRS) Publication 15 (Circular Employer’s Tax Guide). If supplemental wages (bonuses, commissions, etc.) exceed $1 million in a calendar year, the rate for the excess is 37%.

Additionally, bonuses, whether they’re paid when starting a new job or as a year-end bonus, may also be subject to Social Security and Medicare tax as well as state income tax. Employers withhold these taxes and pay them to the IRS for you. So when you get your bonus, you’re getting the net amount, less taxes withheld.

How your income and bonus is taxed may vary depending on your circumstances, however, so it’s a good idea to review your offer with a tax professional.

Average Signing Bonus

The average signing bonus can vary greatly depending on the company, position, and location. In general, signing bonuses may range from $10,000-$40,000+ for management and executive positions, while entry and midlevel position hiring bonuses are usually less than $10,000.

But again, there’s no guarantee that you’ll be offered a signing bonus or that they’ll be pervasive in your given industry.

What Industries Offer the Highest Hiring Bonuses?

The industries that offer competitive hiring bonuses tend to be in the financial and technology sectors.

However, during competitive labor markets, signing bonuses may be offered in various industries that usually don’t offer a bonus. For instance, following the Covid-19 pandemic and subsequent labor shortage, industries such as healthcare, warehousing, and food and beverage offered substantial hiring bonuses to attract potential employees.

Recommended: The Highest-Paying Jobs in Every State

Pros and Cons of Signing Bonuses

Receiving a sign-on bonus could make a job offer more attractive. But before you sign on the dotted line, it’s helpful to consider the advantages and potential disadvantages of accepting a bonus.

Signing Bonus Pros

A signing bonus could help make up a salary shortfall. If you went into salary negotiations with one number in mind, but the company offered something different, a sign-on bonus could make the compensation package more attractive. While the bonus won’t carry on past your first year of employment, it could give you a nice initial bump in pay that might persuade you to accept the position.

You may be able to use a signing bonus as leverage in job negotiations. When multiple companies make job offers, you could use a signing bonus as a bargaining chip. For instance, if Company A represents your dream employer, but Company B is offering a larger bonus, you might be able to use that to persuade Company A to match or beat Company B’s offer.

A sign-on bonus could make up for benefits package gaps. Things such as sick pay, vacation pay, holiday pay, insurance, and a retirement plan can all enhance an employee benefits package. But if the company you’re interviewing with doesn’t offer as many benefits as you’re hoping to get, a large sign-on bonus could make those shortcomings easier to bear.

Signing Bonus Cons

Since sign-on bonuses may be taxable as supplemental wages, you might see a temporary bump in your tax liability for the year. You may want to talk to a tax professional about how you could balance that out with 401(k) or IRA contributions, deductions for student loan interest payments, and other tax breaks.

Additionally, changing jobs might mean having to repay the bonus, depending on your contract. Employers can include a clause in their job offer that states that if you leave the company within a specific time frame after hiring, you’d have to pay back your sign-on bonus. If you have to pay back a bonus and don’t have cash on hand to do so, that could lead to debt if you have to get a loan to cover the amount owed.

This might cause you to get stuck in a job you don’t love. If your employer requires you to pay back a signing bonus, and six months into the job, you realize you hate it, you could be caught in a tough spot financially. Unless you have money to repay the bonus, you might have to tough it out with your employer a little longer until you can change jobs without any repayment obligation.

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Reasons to Negotiate a Signing Bonus

There are several reasons it can be beneficial to negotiate a signing bonus rather than just accept whatever the employer offers.

For one, a signing bonus can help offset the costs of relocating for a new job. Additionally, a signing bonus can help you maintain your current standard of living while you transition to a new city or state. Finally, a signing bonus can allow you to negotiate for other perks and benefits, such as a higher salary, stock options, or a more generous vacation policy.

When Is a Hiring Bonus Negotiated?

A hiring bonus is typically negotiated during the job offer stage after the employer has extended a job offer to the candidate. You don’t want to get ahead of yourself and ask for a hiring bonus immediately because that could hurt your chances of getting one. You generally want to wait for the hiring manager to start the conversation.

After receiving your official job offer with your projected salary and benefits, you’ll be able to gauge your potential bonus opportunity. One rule of thumb is that a hiring bonus is about 10% of your annual salary, though actual figures generally fall within a range of 5%-25%. And if the hiring manager offers you a bonus initially, you might have an advantage in negotiating for a better one.

Tips on How to Ask for a Signing Bonus

If an employer doesn’t offer a sign-on bonus, you don’t have to assume it’s off the table. It’s at least worth it to make the request since the worst that can happen is they say no.

Here are some tips on how to ask for a signing bonus:

1. Know Your Value to the Company

Before asking for more money, either with a bonus or your regular salary, get clear on what value you can bring to the company. In other words, be prepared to sell the company on why you deserve a signing bonus.

2. Choose a Specific Amount

Having a set number in mind when asking for a bonus can make negotiating easier. Do some research to learn what competitor companies are offering new hires with your skill set and experience. Then use those numbers to determine what size bonus it makes sense to ask for.

3. Make Your Case

Signing bonuses are gaining steam in industries such as technology, engineering, and nursing, where there’s more competition for the top job candidates. You’re also sometimes in a better position to ask for a signing bonus if the company didn’t meet the salary you requested when interviewing — a signing bonus is an opportunity to recoup some of that difference. Regardless, it never hurts to consider asking for more money.

Just be sure to do your research first. For instance, perhaps discreetly ask your contacts whether the company might be open to offering a signing bonus, and be sure to do some research online or within your network to see how your job offer stacks up.

4. Split the Difference With Your Salary

One way to potentially have your cake and eat it too when it comes to signing bonuses is to use your salary to offset it. Specifically, instead of asking for a large bonus, you could ask for a smaller one while also asking for a bump in pay.

An employer may be more open to paying you an additional $2,000 a year to keep you on the payroll, for instance, versus handing out a $20,000 bonus upfront when there’s no guarantee you might stick around after the first year.

5. Get It in Writing

If a signing bonus wasn’t part of your original job offer, and you’ve negotiated for one, ensure you receive an updated contract with the bonus included.

The agreement should spell out the amount of the bonus, how it’ll be paid (separate check or part of your regular paycheck), and the terms of the bonus. The contract should note how long you must stay employed at the company to retain your bonus (typically one year).

How to Maximize Your Signing Bonus

After receiving a signing bonus, the next question should be: What do I do with the extra money?

There are several ways you can put a signing bonus to work. For example, if you have credit card debt, it may be a good idea to pay that off. This could be especially helpful if you have credit cards with high interest rates.

You could also use a sign-on bonus to eliminate some or all of your remaining student loan debt. But if you’d rather save your bonus, you might refinance your loans and use the bonus money to grow your emergency fund. Having 3-6 months’ worth of living expenses saved up could be helpful in case you lose your job or get hit with an unexpected bill.

You might also consider longer-term savings goals, such as buying a car or putting money down on a home. Keeping your money in a savings account that earns a high interest rate can help you grow your money until you’re ready to use it.

Recommended: Don’t know how much to save for unexpected expenses? Try our intuitive emergency fund calculator.

Using Your Bonus for Retirement

If you’re caught up with your credit card payments and already have an emergency fund, you might consider investing your bonus for the long term.

This could be a wise financial move considering that a $5,000 signing bonus isn’t as lucrative as negotiating a $2,000 increase in your annual salary. If you can’t negotiate the higher salary, you can at least use your bonus to invest. Investing can be an excellent way to build wealth over time.

For example, you might use part of the money to open a traditional or Roth IRA. This can help you get a head start on saving for retirement and supplement any money you’re already saving in your employer’s 401(k). And you can also enjoy tax advantages by saving your bonus money in these accounts.

Recommended: Should I Put My Bonus Into My 401(k)?

The Takeaway

There’s a lot to think about when you’re looking for a new job. You want to make sure you find a position you love that’ll compensate you fairly. So adding another step in the job search process may seem overwhelming. However, asking for and negotiating a signing bonus using the tips above is critical to help you get hired with the bonus you deserve.

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FAQ

What is a signing bonus?

A signing bonus, also known as a hiring bonus or a sign-on bonus, is a bonus given to employees when they’re hired. A company will pay a signing bonus to help entice the employee to accept the job offer.

How can you negotiate your signing bonus?

To negotiate a signing bonus, you should be clear about what you’re asking for, be reasonable in your request, and have a backup plan if your initial request isn’t met. It’s also important to remember that the company you’re negotiating with likely has a budget for signing bonuses, so be mindful of that when making your request.

What is the average signing bonus?

The average signing bonus depends on several factors, including the company, position, and location. In general, the average hiring bonus for managers and executives may range from $10,000-$40,000+. For lower-level employees, a signing bonus may be less than $10,000.

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May
13
2026
A man at a desk researching the best gold ETFs on a computer.

10 Top Gold ETFs for April 2026

By | invest | Comments Off on 10 Top Gold ETFs for April 2026

Gold ETFs offer a straightforward way to invest in the precious metal, which can be attractive to some investors. Gold investments have the potential to diversify a portfolio and provide a long-term hedge against inflation, currency devaluation, and economic downturns.

Gold ETFs trade on major exchanges like individual stocks and typically operate in one of two ways: holding physical bars in secure vaults or investing in companies within the gold mining sector. Consequently, the value of your investment may shift based on either the spot price of gold or the market performance of the underlying mining stocks.

A look at 10 top gold ETFs can provide insight into the range of options available, though it’s important to consider the risks of gold investments. Gold is highly volatile in the short-term and may lead to losses.

10 Top Gold ETFs

These ten gold ETFs demonstrate the different types of gold ETFs that may be available. The ETFs may invest directly in physical gold or mining operations, and also vary by factors such as the size or type of mining companies they invest in.

The gold ETFs included here have a minimum of $1 billion in assets under management (AUM) and are ranked by market performance. AUM refers to the total value of the securities held within the fund, compared to market capitalization which is the total value of a company’s outstanding shares.

Keep in mind that a fund’s performance can change rapidly in the shorter-term and is not indicative of future returns. It’s important to research any fund you’re considering to determine if it might align with your goals, time horizon, and risk tolerance.

Gold ETF Ticker Assets Under Management Expense Ratio Dividend Yield 1-Month Return 1-Year Return
VanEck Junior Gold Miners ETF GDXJ $9.7 billion 0.51% 2.05% 2.9% 103.1%
iShares MSCI Global Gold Miners ETF RING $3.4 billion 0.39% 0.90% 2.5% 96.0%
VanEck Gold Miners ETF GDX $30.4 billion 0.51% 0.56% 3.5% 89.5%
SPDR Gold MiniShares Trust GLDM $31.9 billion 0.10% -4.4% 43.5%
iShares Gold Trust Micro IAUM $7.6 billion 0.09% -4.4% 43.5%
abrdn Physical Gold Shares ETF SGOL $8.3 billion 0.17% -4.4% 43.5%
Goldman Sachs Physical Gold ETF AAAU $2.9 billion 0.18% -4.4% 43.4%
GraniteShares Gold Trust BAR $1.7 billion 0.17% -4.4% 43.4%
VanEck Merk Gold Trust OUNZ $2.9 billion 0.25% -4.4% 43.4%
iShares Gold Trust IAU $74.7 billion 0.25% -4.4% 43.3%

Source: Data from SoFi and Bloomberg, as of April 16, 2026. Universe of funds includes U.S.-based funds with at least $1B in AUM and no leverage. Funds ranked according to their AUM, expense ratio, and a blend of short-term and long-term performance.

VanEck Junior Gold Miners ETF (GDXJ)

The VanEck Junior Gold Miners ETF (GDXJ) normally invests at least 80% of its total assets in companies that are involved in the gold mining industry. Unlike large cap gold mining ETFs, GDXJ focuses on small and mid-sized companies that are relatively early in their development cycle.

iShares MSCI Global Gold Miners ETF (RING)

The iShares MSCI Global Gold Miners ETF (RING), managed by BlackRock, focuses on companies that derive the majority of their revenue from gold mining. It holds a range of large global mining companies spanning across both developed and emerging markets.

VanEck Gold Miners ETF (GDX)

The VanEck Gold Miners ETF (GDX) tracks the NYSE Arca Gold Miners Index, which measures the overall performance of major companies in the gold mining industry. Launched in 2006, it was the first ETF of its kind in the U.S. and remains one of the most widely traded precious metals mining funds.

SPDR Gold MiniShares Trust (GLDM)

The SPDR Gold MiniShares Trust ETF (GLDM) is designed to reflect the performance of the price of gold bullion, less GLDM’s expenses. Launched in June 2018 by State Street Global Advisors, it serves as a lower cost alternative to the flagship SPDR Gold Shares (GLD). Each share of GLDM represents one 1/100th of an ounce of gold.

iShares Gold Trust Micro (IAUM)

Managed by BlackRock, iShares Gold Trust Micro (IAUM) holds physical gold bars in secure vaults and aims to track the daily performance of the price of gold bullion. It aims to offer investors a simple, liquid way to gain exposure to physical gold. Launched in June 2021, IAUM is one of the newer gold offerings from BlackRock.

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abrdn Physical Gold Shares (SGOL)

The abrdn Physical Gold Shares (SGOL) ETF seeks to reflect the performance of the price of gold bullion (less expenses) and is backed by securely stored gold bars. It was launched in September 2009 and is known for its emphasis on holding “responsibly soured” gold.

Goldman Sachs Physical Gold ETF (AAAU)

The Goldman Sachs Physical Gold ETF (AAAU) holds gold bars in vaults located in the UK and is designed to track the performance of gold bullion over time, minus expenses. The fund was launched in July 2018 to give investors direct exposure to bullion.

GraniteShares Gold Trust (BAR)

The GraniteShares Gold Trust ETF (BAR) holds physical gold bars in a secure vault in London and tracks the LBMA Gold Price PM USD index. Launched in August 31, 2017, it currently offers a lower expense ratio and per share price compared to many other gold-leveraged ETFs.

VanEck Merk Gold Trust (OUNZ)

Like many other gold ETFs, the VanEck Merk Gold Trust ETF (OUNZ) tracks the gold spot price, less expenses, using gold bars and coins held in vaults. What makes OUNZ unique, however, is that it allows individual investors to redeem their share in exchange for one-ounce gold coins.

iShares Gold Trust (IAU)

The iShares Gold Trust (IAU) is the larger sibling of the iShares Gold Trust Micro (IAUM), listed above. Like IAUM, IAU holds vaulted, audited gold bars, allowing each share to represent a direct fractional interest in physical bullion. The primary distinction is the gold exposure per share: IAU represents approximately 1/50th of an ounce, while IAUM represents roughly 1/100th of an ounce.

What Are Gold ETFs?

A gold ETF is an exchange-traded fund designed to give investors exposure to gold price movements without the need to store, insure, or secure physical gold bullion. As noted above, some gold ETFs track the spot price of gold by holding physical gold bullion in secure vaults. Others invest in a portfolio of companies operating within the gold-mining industry.

Like other ETFs, gold ETFs trade on major exchanges throughout the day, with prices fluctuating based on market demand.

What Impacts the Price of Gold ETFs?

Gold ETFs backed by physical gold are largely influenced by the price of gold itself. Gold prices can fluctuate significantly due to factors such as inflation, interest rates, the strength of the U.S. dollar, and geopolitical events.

Gold mining ETFs are influenced not only by gold prices but also by company-specific factors, including mining costs, production levels, management decision, and broader stock market sentiment.

How to Evaluate Gold ETFs

Evaluating gold ETFs requires looking beyond the spot price of gold. Whether investing online or through a brokerage, there are a few general factors to consider whenever investing in an ETF, such its level of diversity, even among a single category like gold, its market volatility, and its liquidity level. Here are few specific considerations, as well:

  • Fund size: Larger funds typically offer higher liquidity and reduced susceptibility to price distortions. Many investors look for ETFs with at least $200 million in assets under management (AUM).
  • Five-year performances. Physically backed gold ETFs are designed to mirror gold price movements, so their long-term performances should generally track the commodity closely.
  • Expense ratios: The expense ratio is the annual fee charged by the fund provider to cover management and operating costs. For example, a 0.10% expense ratio equals $10 per year for every $10,000 invested. Lower ratios can help protect potential long-term performances or returns.
  • Source of performances or returns: Some ETFs track gold prices directly by holding physical bullion. Others invest in gold mining companies, which may outperform the price of gold during strong market conditions but can also introduce additional risks.

Pros and Cons of Investing in Gold ETFs

Gold ETFs offer several advantages, but they also come with tradeoffs.

Pros

  • Easy access to gold: Gold ETFs allow investors to participate in the gold market without purchasing physical bars or coins. They trade on stock exchanges, making them simple to buy and sell through most brokerage accounts.
  • Lower storage and security concerns: Unlike physical gold, gold ETFs eliminate the need for storage, insurance, or security services.
  • High liquidity: Many gold ETFs are highly liquid, allowing investors to enter or exit positions quickly during market hours.

Cons

  • Management fees: Gold ETFs charge annual expense ratios. While these fees are typically small, they can reduce potential long-term returns compared to holding physical gold outright.
  • No physical ownership: Investors own shares of the fund rather than physical gold itself, which may be a drawback for those who prefer tangible assets.
  • Tracking differences: Although gold-backed ETFs aim to follow gold prices closely, small discrepancies may occur due to fees, fund operations, or market factors.

How to Invest in Gold ETFs

If you’re interested in buying a gold ETF, here are the steps involved:

Step 1: Open a Brokerage Account

You need a brokerage or trading account to buy and sell ETFs, since they trade on stock exchanges like individual stocks.

Step 2: Fund Your Account

Transfer money from your bank account to your brokerage account. Most platforms allow ACH transfers, which typically take one to three business days.

Step 3: Search for ETF Ticker

In your brokerage platform, type the ETF’s ticker symbol into the search bar to find the fund.

Step 4: Place a Buy Order

Choose how many shares you want to purchase and decide between a market order (buy immediately at the current price) or a limit order (buy only at the price you choose).

Step 5: Confirm the Trade

Review the details and submit the trade. Once executed, the ETF will appear in your portfolio.

Things to Avoid When Investing in Gold ETFs

Here are some common mistakes to avoid when investing in gold ETFs:

  • Ignoring tax consequences: Gains from physically backed gold ETFs may be taxed at the collectible rate (up to 28%) rather than standard capital gains rate, leading to higher tax bills.
  • Overlooking expense ratios: Higher management fees can gradually reduce your potential net performances over time.
  • Confusing gold ETFs with physical gold: When you buy a gold-backed ETF, you are buying a share in a trust that tracks the price of gold, not physical gold itself. This means you do not own the metal.
  • Overexposure to gold: While gold is often viewed as a potential hedge against inflation or geopolitical instability, its price can fluctuate significantly. Many financial professionals suggest limiting gold exposure to around 10% of a diversified portfolio.

The Takeaway

Gold can be an attractive investment for some investors due to its key attributes. It may offer diversification given its historically lower correlation with traditional stocks and bonds. As a generally stable store of value over the long-term, it may provide a hedge against inflation and periods of economic instability. However, gold doesn’t always perform as expected and it can be incredibly volatile and risky in the short-term.

Investors should carefully review each fund’s holding, expense ratios, and investment strategy to ensure it aligns with their financial goals. As always, consulting with a financial professional may help you determine whether gold fits within your broader investment strategy.

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FAQ

What is the most famous gold ETF?

The largest — and arguably most well-known — gold exchange-traded fund (ETF) is SPDR Gold Shares ETF (GLD). The fund is designed to track the price of gold by holding physical gold bullion.

Is it wise to invest in gold ETFs?

Gold exchange-traded funds (ETFs) can be appealing because they offer a liquid and convenient way to gain exposure to gold prices. However, like any investment, they carry risks including high short-term volatility and may not be suitable for every portfolio.

Do gold ETFs pay dividends?

Gold exchange-traded funds (ETFs) backed by physical bullion typically do not pay dividends. However, gold mining ETFs may pay dividends because they invest in companies that may generate profits.

How do taxes work on gold ETF gains?

Gains from gold exchange-traded funds (ETFs) backed by physical gold may be taxed at the collectible rate (up to 28%) in the U.S. Gold mining ETFs, by contrast, are generally taxed like other equity ETFs.

About the author

Samuel Becker

Samuel Becker

Sam Becker is a freelance writer and journalist based near New York City. He is a native of the Pacific Northwest, and a graduate of Washington State University, and his work has appeared in and on Fortune, CNBC, Time, and more. Read full bio.

Photo credit: iStock/Liubomyr Vorona

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Exchange Traded Funds (ETFs): Before investing in Exchange Traded Funds (ETF), always read the fund's prospectus. It contains important information about the fund’s objectives, risks, and fees. You can get a prospectus from the fund company’s website or by emailing our customer service at [email protected].

Investment Risk: Diversification can help reduce some investment risk, but cannot guarantee profit nor fully protect in a down market.

Before investing, carefully consider the investment objectives, risks, charges, and expenses detailed in a Fund’s prospectus. This document contains important information and must be read carefully prior to investing; you can find the current prospectus by clicking the link on the Fund’s respective page.
Alternative investments are highly risky and may not be suitable for all investors. These investments often involve leveraging, speculative practices, and the potential for complete loss of investment. They typically charge high fees, lack diversification, and can be highly illiquid and volatile. Be aware that both registered and unregistered alternative investments, including Interval Funds, are not subject to the same regulatory requirements as mutual funds, and their illiquid nature may restrict your ability to trade on your timeline. Always review the specific fee schedule for Interval Funds within their prospectus.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOIN-Q126-031

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May
12
2026
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An Introduction to Secondary Offerings

By | Financial Independence, Growing Wealth, invest, Investing | Comments Off on An Introduction to Secondary Offerings

You may be familiar with the phrase “initial public offering,” or IPO, when a new company makes its shares available on a public exchange. The term secondary offering can refer to a couple of things: One is when investors sell their IPO shares on the secondary market to other investors. Another is when companies seek to raise more cash in a follow-on offering some time after the IPO.

When companies seek to raise additional capital after an IPO through a secondary offering, there are two types: dilutive and non-dilutive. Secondary offerings can have a significant impact on stock prices, so it’s beneficial for investors to understand how they work. Let’s dive into the details.

Key Points

•   Secondary offerings occur when a company or its shareholders sell additional shares after an initial public offering (IPO).

•   These offerings can be dilutive, issuing new shares, or non-dilutive, selling existing shares.

•   Dilutive offerings decrease existing shareholders’ ownership percentage, potentially lowering the stock’s value.

•   Non-dilutive offerings involve shareholders selling their shares, not affecting the company’s share count.

•   Understanding the type of secondary offering is crucial for investors assessing potential impacts on stock value.

What Are Offerings in Stock?

When a company begins selling shares of stocks, bonds, or other securities to the public, it’s called an offering.

Usually, people talk about buying stocks during initial public offerings, or IPOs, but there are other types of offerings companies can make to raise cash.

A company may have later offerings, post-IPO, which are called seasoned offerings or follow-on public offerings (FPOs) in which the company sells new shares on the market or by issuing a convertible note offering. These are low-interest notes that can be converted into shares, often within 5-10 years.

Any of these can also be called a secondary offering or secondary stock offering.

Companies may make these offerings if they need cash, are looking to expand their business, want to acquire another company, or their stock is performing well, and they want to stoke investor demand with a limited additional supply of new shares.

Primary vs Secondary Offerings

The difference between primary and secondary offerings is pretty straightforward, but there are different types of secondary offerings.

A primary offering is to raise capital. Companies issue new shares to investors in exchange for cash that’s used to fund business operations, make acquisitions, and achieve other corporate aims.

In a secondary stock offering, investors who own those IPO shares can buy and sell their shares directly from and to each other. Or a company may decide to issue new shares. Here’s what that can look like.

Recommended: Shares vs. Stocks: What’s the Difference?

What Is a Secondary Offering, What Are the Different Types?

There are a couple of different types of secondary offerings, so it’s important to distinguish between them.

The main definition of a secondary offering refers to investors who buy and sell IPO shares among each other. In this case, the cash is exchanged between investors, as noted above.

Sometimes a company needs to raise more capital and may hold what’s known as a follow-on, or seasoned equity offering. This is referred to as a type of secondary offering as well.

Sometimes, in this type of secondary offering, shareholders, such as the CEO and founders, sell a portion of their shares on the secondary market for private or personal reasons. If the shares are sold by individuals, the money goes to those sellers.

If the shares come from the company, the money raised from the sale goes to the company. There are two types of shares that can be offered here: dilutive and non-dilutive.

Types of Secondary Offerings

It’s important for investors to understand the difference between dilutive and nondilutive shares, as they can have different impacts on the value of the stock.

Dilutive Secondary Offerings

A dilutive offering involves the creation of additional shares by the company, which in turn reduces the amount of ownership that existing shareholders have. As the name implies, the offering has a dilutive effect. Investors often have a negative sentiment toward dilutive offerings.

The company’s board of directors must approve of the increase in floating stock shares. The float of a stock is the number of shares available for trade, which excludes closely held shares and restricted stock.

Non-Dilutive Secondary Offerings

With nondilutive offerings, no additional shares are created. A non-dilutive offering is often made by major shareholders selling their existing shares. This doesn’t have any effect on the company itself, except perhaps the investor’s perception about why the shareholders are selling.

This type of offering can also be beneficial because it allows more individuals and institutions to invest, which can increase the stock’s liquidity since there are more people buying and selling.

Examples of Secondary Offerings

Many companies make secondary offerings following their IPOs.

Google made a secondary offering in 2005 after its IPO in 2004. During the IPO, the company had a share price of $85 and raised $1.6 billion for the company and existing shareholders. During the secondary offering, the share price was $295, and the company raised $4 billion.

Then there’s Rocket Fuel, a company that made a secondary offering of five million shares in 2014. Existing shareholders sold three million shares, and the company sold two million, all at a price of $61 per share. Just four months after the secondary offering, the value of the shares had gone down by over 65%, to $21.

Why Make a Secondary Offering?

Similar to an IPO, a secondary offering helps companies raise money so they can expand their operations. This can be a quick way for companies to raise significant funds fairly efficiently.

Companies may also hold a second offering between their IPO and the end of their stock’s lock-up period, which is a time when large shareholders aren’t allowed to sell shares. After the lock-up period, a stock’s price often falls when these shareholders sell off some of their shares. By holding a secondary offering before the end of the lock-up period, additional investors can benefit from the success of an IPO. However, secondary offerings during or just after a lock-up period can lead to significant price volatility as the supply of shares increases.

It’s important for investors to look into why a company is making a secondary offering before deciding whether to invest, as this can affect the price of the stock in both the short and long term.

How to Trade Secondary Offerings

Most companies that file secondary offerings choose to do so soon after the end of the lock-up period after their IPO. When a company wants to make a secondary offering, they file it for approval with the SEC — the U.S. Securities and Exchange Commission.

Investors can find out about the latest secondary offerings in a few ways. The SEC has a database of secondary offerings called the EDGAR database, where investors can find out about them. Investors can also look to the NASDAQ list of secondary offerings made by companies listed on the NASDAQ stock exchange. Companies filing secondary offerings tend to get covered in the media and also put out press releases with details about the offering.

How Do Stock Prices React to a Secondary Offering?

The basic concept of supply and demand dictates that if there’s more of something available, its price will likely decrease. This sometimes occurs during a secondary offering, but not always.

If more shares are created, the price of the shares may fall, especially with dilutive offerings because they can decrease the earnings per share of the stock.

Pricing Strategy and Short-Term Market Reactions

The price of stocks can also decrease during a secondary offering because the company issues the offered shares at a discounted price to incentivize investors to buy. The decrease in value can last a while because any investors who buy in at the discounted price can sell at a slight increase and make a profit.

If a company creates new shares and sells them at market value with a discount to account for the amount of dilution, this generally results in the least amount of price volatility.

When Secondary Offerings Signal Strength or Have Limited Market Impact

Although a secondary offering often results in a decline in stock price, that isn’t always the case. Non-dilutive offerings are viewed more positively, as they don’t affect the stock’s earnings per share or shareholders’ percentage of ownership. Also, it can be seen as a good sign for the long-term value of the stock if a company is investing in growth and acquisitions.

Many secondary offerings don’t have any restrictions, but some may require a lock-up period similar to an IPO, during which investors aren’t allowed to sell their shares.

The Takeaway

There are key differences between a primary offering and the different types of secondary offerings. A primary offering is when a new company goes public and makes its shares available on a public exchange — this is part of how companies raise capital.

A secondary offering is when IPO investors subsequently sell their shares on the secondary market to other investors. In this case, the company doesn’t issue new shares, and they don’t raise more cash from this type of secondary stock offering. However, companies can seek to raise more cash in a follow-on offering some time after the IPO — which is also called a secondary offering. There are two types, dilutive and non-dilutive secondary offerings, which can impact the stock price overall.

Whether you’re curious about exploring IPOs, or interested in traditional stocks and exchange-traded funds (ETFs), you can get started by opening an account on the SoFi Invest® brokerage platform. On SoFi Invest, eligible SoFi members have the opportunity to trade IPO shares, and there are no account minimums for those with an Active Investing account. As with any investment, it's wise to consider your overall portfolio goals in order to assess whether IPO investing is right for you, given the risks of volatility and loss.


Opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.¹


¹Probability of member receiving $1,000 is 0.026%. If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease.

FAQ

Is a secondary offering good for stock?

A secondary stock offering can be good for the stock price, particularly if the shares offered are non-dilutive. Dilutive shares, which reduce the value of existing shares, may not be good for the stock price in the short term — although prices may recover.

What is the difference between a primary and secondary offering?

A primary offering is to raise capital, typically during an initial public offering (IPO). In a secondary offering, investors with IPO shares can trade their shares directly with each other. Or a company may decide to issue new shares in a follow-on offering to raise more cash.

Can you sell a secondary offering stock?

Yes, you can sell stock from a secondary offering, whether you’ve bought it from an IPO investor selling their shares, or from the company during a follow-on offering. In either case, the shares trade on the open market once the offering is completed.

How do you sell on secondary?

To sell stock on a secondary market, shareholders need to find a buyer through whatever method they deem most efficient (there are platforms that can facilitate this), come to an agreement regarding price, and execute a trade. This process ultimately results in a direct exchange of shares between private parties.

What is the purpose of a secondary listing?

In general, the purpose of a secondary listing is to raise more capital, and to expand a customer’s investor base. It can also help improve liquidity and increase visibility in new markets.

What are the risks of buying from a secondary market?

Buying from a secondary market means that an investor is purchasing securities from any public stock exchange. As such, the risks of buying on the secondary market are the same as buying any stock — there are market risks, credit risks, and other risks baked into the securities.

What are the benefits of secondary markets to investors?

Secondary markets give investors access to publicly traded securities, and for shareholders, open up liquidity for their holdings, as there’s a market full of potential buyers. Overall, secondary markets facilitate trading and thus create liquidity.

Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC. For a full listing of the fees associated with Sofi Invest, see our fee schedule.

Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of losing principal. Key risks include, but are not limited to, unproven management, significant company debt, and lack of operating history. For a comprehensive discussion of these risks, please refer to SoFi Securities' IPO Risk Disclosure Statement. This is not a recommendation and does not constitute an offer of any securities for sale. Investors must carefully read the offering prospectus to determine if an offering is consistent with their objectives, risk tolerance, and financial situation. New offerings often have high demand and limited shares. Many investors may receive no shares, and any allocations may be significantly smaller than the shares requested in their initial offer (Indication of Interest). For more information on the allocation process, please visit IPO Allocation.

Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This article is not intended to be legal advice. Please consult an attorney for advice.

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May
12
2026
Focused woman with curly hair using a laptop to research ETFs at a desk in a modern, plant-filled workspace.

Top AI ETFs to Invest In: 2026 Guide

By | invest | Comments Off on Top AI ETFs to Invest In: 2026 Guide

Artificial intelligence is rapidly becoming one of the most transformative forces in the global economy. From generative AI tools to robotics and automation, breakthroughs in AI are reshaping industries and driving innovation. For investors, this momentum has generated a new investment opportunity: AI exchange-traded funds, or ETFs.

Artificial intelligence ETFs allow investors to gain relatively low-cost, diversified exposure to the rapidly expanding AI sector, spreading risk across a wide range of companies, while tapping into the potential of a technology that’s just beginning to scale.

AI investments also come with risks to be aware of, such as the potential for higher volatility. In this quarterly AI ETF guide, we’ll identify some of the top AI ETFs by assets under management (AUM), along with considerations when investing in AI.

Key Points

•   Artificial intelligence ETFs offer a relatively low-cost, diversified way to invest in the rapidly growing artificial intelligence sector.

•   Some of the top AI ETFs by AUM, as of April 2026 include Global X Artificial Intelligence & Technology ETF (AIQ), Defiance Quantum ETF (QTUM), iShares U.S. Technology ETF (IYW), and more.

•   Investing in AI ETFs allows for exposure to AI technology while diversifying risk compared to individual AI stock investments.

•   AI ETFs differ from AI mutual funds in trading flexibility, management style, liquidity, and cost.

•   When choosing an AI ETF, consider factors like expense ratio, fund size, diversification of holdings, and alignment with financial goals and risk tolerance.

What Is an AI ETF?

The term AI ETF refers to an exchange-traded fund (ETF) that focuses on companies that in some way participate in the artificial intelligence sector.

It’s important to understand how ETF investments work, as these funds differ from mutual funds and stocks in key ways. As with other types of ETFs, AI ETFs hold multiple assets in one fund, typically including the stocks of companies involved in AI development, AI-powered products, and AI infrastructure.

When considering ETFs vs. mutual funds, ETFs may be lower cost and more liquid, with potential tax efficiencies.

An AI ETF may also refer to an ETF that uses artificial intelligence to help pick the stocks that it invests in, though this definition is less common.

Types of AI ETFs to Consider

ETFs that are built around artificial intelligence stocks are not all the same. Here are some differences to be aware of.

Passive vs. Active ETFs: The far majority of ETF assets are in passively managed funds that track a certain index, such as the S&P 500. However, the number of actively managed ETFs has sharply risen in recent years, and is now roughly equivalent to the number of passive funds. According to one study, actively managed ETFs outnumbered passively managed ones in 2025.

Unlike passively managed funds, actively managed funds are managed by a portfolio manager who continuously adjusts investments to attempt to outperform an index. This is important for investors to know, as active funds may charge higher fees, and may offer more complex strategies.

Technology ETFs: For those familiar with investing in technology stocks, many AI ETFs are essentially portfolios of tech stocks, and often include familiar tech companies such as Microsoft, Nvidia, and AMD. In other words, when investing in a tech-focused ETF, it’s also possible to gain exposure to many AI industry leaders.

Thematic ETFs: Investors can also look for funds that are specifically invested in AI-centered stocks, under the umbrella of thematic ETFs. Thematic funds are those focused on longer-term trends, rather than established sectors (e.g., green technology, water scarcity, or AI).

AI-powered ETFs: As noted above, artificial intelligence algorithms can be used to select and help manage an ETF portfolio. This does not ensure that the fund’s portfolio is invested in AI stocks; it’s best to check the meaning of the AI label from fund to fund.

Get up to $1,000 in stock when you fund a new Active Invest account.*

Access stock trading, options, alternative investments, IRAs, and more. Get started in just a few minutes.

*Probability of member receiving $1,000 is 0.026%. If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease. See full terms and conditions.

Top AI ETFs by Assets Under Management in 2026

As of April 2026, these are some of the largest U.S.-based artificial intelligence ETFs, by AUM.

iShares U.S. Technology ETF (IYW)

•   AUM: $21.85 billion

•   Expense ratio: 0.38%

•   Performance (1-year): 29.39%

•   Performance (3-year): 25.35%

•   Top holdings: NVIDIA Corporation (NVDA), Apple (AAPL), Alphabet (both GOOGL and GOOG), Microsoft (MSFT), and Broadcom (AVGO)

•   Why it stands out: This ETF tracks a market-cap weighted index of U.S. technology companies, including many big names in the AI space.

Fidelity MSCI Information Technology Index ETF (FTEC)

•   AUM: $18.214 billion

•   Expense ratio: 0.084%

•   Performance (1-year): 52.7%

•   Performance (3-year): 32.63%

•   Top holdings: NVIDIA Corporation (NVDA), Apple (AAPL) Microsoft (MSFT), Broadcom (AVGO), Micron (MU)

•   Why it stands out: This is another large, diversified AI and big data fund ETF that blends both innovators and infrastructure providers, including many large tech companies.

iShares Expanded Tech Sector ETF (IGM)

•   AUM: $9.72 billion

•   Expense ratio: 0.39%

•   Performance (1-year): 30.95%

•   Performance (3-year): 28.3%

•   Top holdings: Broadcom (AVGO), Apple (AAPL), NVIDIA Corporation (NVDA), Microsoft (MSFT), and Alphabet (GOOGL)

•   Why it stands out: The ETF offers broad exposure to the tech sector, and particularly to those with heavy involvement in AI.

Global X Artificial Intelligence & Technology ETF (AIQ)

•   AUM: $8.88 billion

•   Expense ratio: 0.68%

•   Performance (1-year): 28.54%

•   Performance (3-year): 24.03%

•   Top holdings: SK Hynix Inc. (000660 KS), Intel (INTC), Micron (MU), Samsung Electronics (005930 KS), Advanced Micro Devices (AMD)

•   Why it stands out: Provides broad exposure to the AI sector, particularly in companies who manufacture semiconductors and related components.

iShares Global Tech ETF (IXN)

•   Market cap / AUM: $7.94 billion

•   Expense ratio: 0.39%

•   Performance (1-year): 33.26%

•   Performance (3-year): 23.35%

•   Top holdings: NVIDIA Corporation (NVDA), Apple (AAPL), Microsoft (MSFT), Broadcom (AVGO), Taiwan Semiconductor Manufacturing (2330)

•   Why it stands out: A very broad technology-focused fund, the ETF tracks a market cap-weighted index of international tech stocks.

First Trust Dow Jones Internet Index Fund (FDN)

•   AUM: $5.2 billion

•   Expense ratio: 0.49%

•   Performance (1-year): 5.39%

•   Performance (3-year): 16.55%

•   Top holdings (tickers): Amazon (AMZN), Meta (META), Cisco Systems (CSCO), Netflix (NFLX), Alphabet (GOOG)

•   Why it stands out: The ETF tracks a market-cap-weighted index of large, liquid internet-focused companies in the U.S.

Defiance Quantum ETF (QTUM)

•   AUM: $4.33 billion

•   Expense ratio: 0.4%

•   Performance (1-year): 81.32%

•   Performance (3-year): 48.81%

•   Top holdings (tickers): Intel (INTC), Micron (MU), Global Unichip Corp (3443 TT), STMicroelectronics N.V. (STM), Nokia Oyj (NOK)

•   Why it stands out: Thematic play as this ETF is dedicated to generative AI including large language models (LLMs).

Why Consider Investing in AI ETFs?

There’s no denying that artificial intelligence has already transformed many aspects of the economy and investing, and it appears likely to continue to do so in the years to come. Investing in an AI ETF gives you access to the growing AI technology sector, while potentially diversifying your risk compared to investing in individual AI stocks.

Rather than investing in individual AI companies, an AI ETF gives you broader exposure to a number of different AI companies.

AI ETFs vs Other Investment Options

It’s important to understand how ETFs compare to other investment options.

AI ETFs vs. AI Mutual Funds

The difference between AI ETFs and AI mutual funds is similar to the difference between ETFs and mutual funds in general.

ETFs trade on an exchange, may be passively or actively managed, usually have lower expense ratios than traditional mutual funds, and allow you to trade throughout the day.

In contrast, mutual funds are usually actively managed, can only be traded at the end of each day, are bought directly from the fund company, and often come with higher expense ratios than ETFs.

AI ETFs vs. Individual AI Stocks

Another way to invest in the AI sector is by choosing individual AI stocks to invest your money in. This might include companies that focus on robotics, self-driving vehicles, large language model (LLM) generation, or improving manufacturing processes.

While investing in individual stocks does open up the possibility of higher returns if you pick a company that outperforms the market, you also risk seeing lower returns or losses if your stock doesn’t do well.

Remember that you can choose more niche, targeted AI ETFs. This can allow you to find an ETF that focuses directly on specific applications of AI, like robotics, automation, or self-driving technology.

How to Compare and Choose an AI ETF

With a self-directed investment account, you can research and choose which AI ETF you want to invest in. You can select an AI ETF in the same way you would with any other stock, mutual fund, ETF, or other investment. If you have specific AI companies you want to make sure you have exposure to, check the fund’s top holdings to make sure it’s represented.

You can also look at the fund’s past performance as compared to other funds over the same time period, although keep in mind that past performance does not guarantee future results.

Another important factor to bear in mind is the fund’s expense ratio. These costs, which are often expressed as a percentage, may seem small, but they can add up over time, and all investment fees effectively reduce potential returns.

Reviewing all of these factors can help you decide which AI ETF is right for you.

How to Invest in AI ETFs

There are many different ways to invest in ETFs, and the exact steps will depend on which brokerage you use and what ETFs you are interested in. Your overall investing goals and strategies will be important as well. Still, here are a few steps to consider when investing in AI ETFs:

•   Choose a brokerage: Find a brokerage that offers AI ETFs. You may choose to use a brokerage where you already have an account, or open an account at a different brokerage.

•   Research ETFs: Decide which ETF you want to invest in. Your brokerage may have research tools to help you, or you might choose to research on your own.

•   Place an order: Once you’ve decided how you want to invest, place an order at your brokerage.

Recommended: How to Invest in ETFs

Risks of Investing in AI ETFs

AI ETFs and stocks can be highly volatile. AI assets may fluctuate rapidly as market sentiments swings from enthusiasm to skepticism. Additionally, as with any emerging technology, there is a risk that some AI technology companies may go out of business. The AI industry is highly competitive, with new players appearing and changing frequently.

Many investors view AI as a long-term prospect, similar to the rise of the internet, as more companies and sectors adopt AI technology. Investors are also concerned about the prospect of an AI bubble, similar to the earlier dot-com bubble, given high valuations and concern that the often massive expense of developing AI infrastructures may not lead to near-term profits.

It’s a good idea for investors to consider whether a potentially higher-risk, higher-reward investment, like AI, has a place in their overall portfolio and aligns with their time horizon and goals.

Investing in an AI ETF is generally considered less risky than investing in individual stocks, since you are diversifying your risk across many different companies. However, keep in mind that some AI ETFs may be riskier than others, depending on factors such as their level of diversification, concentration in a particular area, assets under management (AUM), and volatility.

The Takeaway

AI is evolving at a breathtaking pace, with adoption expanding from consumer tools to enterprise solutions, manufacturing, and beyond. For investors interested in broad AI technology funds or more focused strategies like generative AI or robotics, AI ETFs may offer exposure to the potential growth of AI, while balancing risk through more diversified holdings.

Keep in mind that AI investments can be higher risk given their high volatility. A financial planner can help you determine if an AI ETF may be a fit for your portfolio.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest®. You can trade stocks, ETFs, or options through self-directed investing with SoFi Securities, or simply automate your investments with a robo advisor from SoFi Wealth. You'll gain access to alternative investments and upcoming IPOs, and can plan for retirement with a tax-advantaged IRA. With SoFi, you can manage all your investments, all in one place.

Take a step toward reaching your financial goals with SoFi Invest.

FAQ

How do I choose the right AI ETF?

When choosing an AI ETF, you’ll want to look at factors such as expense ratio, fund size, diversification of holdings, and whether it focuses on pure AI companies or broader technology. It’s also helpful to review an ETF’s holdings to ensure they align with your investment goals and risk tolerance.

Is there an AI-managed ETF?

Yes, some ETFs use AI to pick which stocks to invest in. This may or may not mean the fund itself is invested in artificial intelligence technology, however.

What is the best way to invest in AI?

There is no single best way to invest in AI — instead, it will depend on your risk profile and investment goals. AI ETFs can provide diversified exposure to the sector, which may be less risky than focusing on a single company. More aggressive investors may also consider individual AI stocks or venture capital opportunities in startups.

How are AI ETFs different from regular tech ETFs?

Investing in AI ETFs has a few key differences as compared to investing in technology stocks or technology ETFs. AI ETFs tend to focus on companies that are developing or heavily leveraging artificial intelligence, machine learning, and automation.

What are the biggest risks of investing in AI ETFs?

One of the biggest risks of investing in AI ETFs is high volatility, since AI is still an emerging sector with uncertain regulation and adoption timelines. Because there are not as many companies focusing on artificial intelligence yet, AI ETFs may also be heavily concentrated in fewer stocks. This increases exposure to individual company performance, which can also increase volatility.

About the author

Dan Miller

Dan Miller

Dan Miller is a freelance writer who has spent over ten years covering developments in the finance space. His expertise extends to all things personal finance, including student loans, budgeting, credit cards, and mortgages. Read full bio.

Photo credit: iStock/miniseries

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Mutual Funds (MFs): Investors should read and carefully consider the information contained in the prospectus, which contains the Mutual Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or SoFi's customer service at: 1.855.456.7634. Mutual Funds must be bought and sold at NAV (Net Asset Value); unless otherwise noted in the prospectus, trades are only done once per day after the markets close. Investment returns are subject to risks. Shares may be worth more or less their original value when redeemed. The diversification of a mutual fund will not protect against loss. A mutual fund may not achieve its stated investment objective. Rebalancing and other activities within the fund may have tax implications.

Exchange Traded Funds (ETFs): Before investing in Exchange Traded Funds (ETF), always read the fund's prospectus. It contains important information about the fund’s objectives, risks, and fees. You can get a prospectus from the fund company’s website or by emailing our customer service at [email protected].

Investment Risk: Diversification can help reduce some investment risk, but cannot guarantee profit nor fully protect in a down market.

S&P 500 Index: The S&P 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. It is not an investment product, but a measure of U.S. equity performance. Historical performance of the S&P 500 Index does not guarantee similar results in the future. The historical return of the S&P 500 Index shown does not include the reinvestment of dividends or account for investment fees, expenses, or taxes, which would reduce actual returns.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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May
11
2026
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What Does NAV Mean in Stocks & Finance?

By | Growing Wealth, invest, Investing | Comments Off on What Does NAV Mean in Stocks & Finance?

Net asset value (NAV) is an important metric for knowing how much each share of an investment fund, like a mutual fund or ETF, is worth. However, NAV alone cannot tell investors everything they need to know about potential investments.

Calculating NAV is helpful for fund valuation and pricing. Still, there are times when it is more beneficial to look at other aspects of a fund, like total return, to determine investment opportunities. Nonetheless, investors need to know what NAV is in investing, how to calculate NAV, and when and why it makes sense to use it.

Key Points

•   NAV (net asset value) represents the total value of an investment fund’s assets minus liabilities, divided by outstanding shares to determine per-share worth.

•   The NAV formula is calculated by taking a fund’s total asset value, subtracting its total liability value, and dividing by the number of shares outstanding for the fund.

•   Mutual funds use NAV calculated daily to determine share prices since they don’t trade on exchanges for market prices, while ETFs trade throughout the day for market price but are still required to calculate NAV daily.

•   ETFs often trade at premiums or discounts to NAV, allowing traders to compare market prices against NAV for investment decisions.

•   NAV works best alongside other evaluation factors including a fund’s past performance, securities allocation within the fund, and comparison against benchmark indices like the S&P 500.

What Does NAV Mean in Finance?

NAV represents the value of an investment fund. NAV is calculated by adding up what a fund owns (the assets) and subtracting what it owes (the liabilities).

NAV, which can be helpful for value investing, is typically used to represent the value of the fund per share. So the resulting total above is usually divided by the number of outstanding shares. This makes it easier for investors to value and price the shares of a fund. Mutual funds, for example, use per-share NAV to determine their share price.

NAV is different from market capitalization, which multiples the number of a company’s outstanding shares by the current price per share.

The NAV changes daily because an investment fund’s assets and liabilities change daily based on market prices. The assets of an investment fund include the daily market value of the fund’s holdings, which are usually securities like stocks and bonds. The liabilities of a fund are usually debts owed to financial institutions and expenses, like salaries, operating costs, and other fees.

The Securities and Exchange Commission (SEC) requires that mutual funds calculate their NAV at least once each business day. Most mutual funds perform their calculations after the major U.S. securities exchanges close for the day.

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The NAV Formula & How to Calculate It

NAV is calculated by taking a company or investment fund’s total assets and subtracting its liabilities. This figure is usually divided by the fund’s number of outstanding shares because NAV is generally represented on a per-share basis. The formula looks like this:

NAV = (Total Value of Assets – Total Value of Liabilities) / Number of Shares Outstanding

How NAV Is Used in Investing

NAV can be used for investments, and by investors, in a number of ways, often depending on the specific type of asset an investor is considering for their online brokerage account. It can give investors insight into a fund’s performance, but NAV doesn’t necessarily tell the whole story.

Mutual Funds

Mutual funds are usually open-ended funds, meaning that investors buy and sell shares of the fund from the fund directly and not on an exchange like a stock. Because these funds don’t trade on an exchange for market prices, NAV is used to price the fund’s shares.

Mutual funds calculate their NAV per share daily, usually at the end of the business day, and that is the price an investor will pay to buy or sell shares in the fund. Every mutual fund company has its own cut-off time for buying and selling shares. After that time, investors buying or selling shares will get the fund’s NAV for the day after their transaction order is received.

ETFs

Exchange-traded funds (ETFs) and closed-end funds are similar to traditional mutual funds.

However, one big difference between ETFs vs. mutual funds is that investors can buy and sell ETFs throughout the trading day for a market price and not the NAV per share. Investors can make buy and sell orders for traditional mutual funds once per day and only at their published NAVs.

ETFs are still required to calculate the fund’s NAV once per day, like a mutual fund. Additionally, an ETF’s NAV is calculated approximately every 15 seconds over each trading day and published on various financial websites.

Because ETFs tend to trade at a premium or a discount to their NAV, traders who invest in ETFs often compare market prices and NAV to take advantage of the differences and make investment decisions.

Example of Calculating Mutual Fund NAV

As an example of calculating mutual fund NAV, imagine that mutual fund XYZ has $100 million worth of investments in different securities, based on the day’s closing prices for each security, and $10 million in liabilities and expenses. The NAV for this fund would be $90 million. If the fund has 5 million shares outstanding, the NAV per share for mutual fund XYZ would be $18.

The NAV for mutual fund XYZ can be calculated using the above formula:

NAV = ($100,000,000 – $10,000,000) / 5,000,000 = $18

How to Interpret NAV in Stocks

Investors interested in online stock trading may be wondering what NAV means in stocks.

One thing to know is that a fund’s NAV alone doesn’t tell investors much; a high NAV for one fund is not necessarily better than a low NAV in another fund. Similar to stock prices, a high stock price doesn’t necessarily mean the stock is a better investment than a stock with a lower price.

Looking at a fund’s NAV and comparing it to another fund does not provide investors insight into which fund is the better investment. It’s more important for investors to look at NAV alongside other factors, like the fund’s past performance, the allocation of securities within each fund, and how it performs compared to benchmark indices like the S&P 500 Index.

Limitations of using NAV

If a mutual fund invests in dividend-paying stocks or fixed-income assets, these securities’ dividends and interest payments go to the investor. Additionally, a mutual fund may distribute realized capital gains to shareholders. These payouts reduce the fund’s assets and result in a lower NAV. Because these benefits lower a fund’s NAV, it shows that NAV may not be the only figure to pay attention to when analyzing the performance of a fund.

Other factors can also impact a fund’s NAV. For example, the fund’s management fee and additional fees that add up to the fund’s total expense ratio will come out of the fund’s total assets, thus affecting NAV. In addition to management fees, expenses can include costs related to the administrative, compliance, distribution, management, marketing, shareholder services, and record-keeping of the fund. It’s common practice for mutual funds to assess this debit on the fund’s assets every trading day.

When analyzing the performance of mutual funds, it can make sense to look at metrics other than NAV alone, like investment yield and the funds’ total return. The total return considers capital gains and losses from all of the securities the fund invests in, as well as the dividends and interest earned by the fund, minus the fund’s expenses.

The Takeaway

Net asset value, or NAV, is a daily calculation that can track the value of a mutual fund, ETF, or money market fund. But while this figure can be helpful to gauge a fund’s performance, it isn’t the only metric to consider. Total return, yield, and fees are also important figures when making mutual fund investing decisions.

Remember that NAV itself doesn’t tell an investor everything that they need to know, but is just one metric or data point that can be used along with an array of others to analyze funds.

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FAQ

Is NAV the same as a stock’s market price?

No. NAV and a stock’s market price are two different things. Net asset value represents a fund’s total assets minus its liabilities, divided by the number of outstanding shares. Market price is the current price of a share on the open market, which can fluctuate depending on supply and demand.

How often is NAV calculated for funds?

NAV is calculated once daily for mutual funds and ETFs, usually after the market closes. In addition, EFTs also calculate a NAV (often called an intraday NAV or iNAV) approximately every 15 seconds throughout the trading day.

Why is net asset value important?

Net asset value is important for investors because it describes the total equity or value of a fund. It can help determine the value a share of a fund has, and can help investors evaluate the overall value of an investment.

Is it good to invest when NAV is down?

If a fund’s NAV is down, that could be a sign that the fund’s performance is suffering. But it doesn’t necessarily mean that it’s a good time to invest in that fund, or a bad time to do so — other metrics must be considered along with NAV, at any given time, to determine whether an investor wants to alter their position.

What is an example of a NAV?

An example of NAV could be $18, and that would be calculated looking at a fund’s underlying securities. You’d need to know the fund’s assets and liabilities, and calculate accordingly to find NAV. Again, $18 is just an example, as NAV could be any dollar figure as it relates to the fund’s assets and liabilities.

Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC. For a full listing of the fees associated with Sofi Invest, see our fee schedule.

Mutual Funds (MFs): Investors should read and carefully consider the information contained in the prospectus, which contains the Mutual Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or SoFi's customer service at: 1.855.456.7634. Mutual Funds must be bought and sold at NAV (Net Asset Value); unless otherwise noted in the prospectus, trades are only done once per day after the markets close. Investment returns are subject to risks. Shares may be worth more or less their original value when redeemed. The diversification of a mutual fund will not protect against loss. A mutual fund may not achieve its stated investment objective. Rebalancing and other activities within the fund may have tax implications.

Exchange Traded Funds (ETFs): Before investing in Exchange Traded Funds (ETF), always read the fund's prospectus. It contains important information about the fund’s objectives, risks, and fees. You can get a prospectus from the fund company’s website or by emailing our customer service at [email protected].

S&P 500 Index: The S&P 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. It is not an investment product, but a measure of U.S. equity performance. Historical performance of the S&P 500 Index does not guarantee similar results in the future. The historical return of the S&P 500 Index shown does not include the reinvestment of dividends or account for investment fees, expenses, or taxes, which would reduce actual returns.

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