Mutual Fund NAV – Net Asset Value And It’s Use

Net Assets Value of a mutual fund is known as Mutual Fund NAV. The shares are traded daily at a share price which changes every day. Each mutual fund have a NAV, or Net Asset Value for every share, which is calculated each day, and is derived from the closing market price, to the particular day, of the shares and various other securities, which are in their investment portfolio.

Every purchase or sell order, pertaining to shares of mutual funds, is priced based on the NAV on the day of the trade. The investor will not actually obtain the trade price at which this particular transaction happened till the following day.

Mutual Fund by definition pay out all of their revenue and capital gains to their share holders. Because of this, the change in the NAV of any fund are definitely not the simplest way to gauge their performance. The real performance could be best measured by the annual total return.

Closed end mutual funds and ETFs are usually traded in the same manner as shares on the stock market. As a result of this, the shares of these trade at the market value, which can sometimes be above (ie trading at a premium) or sometimes below ( ie trading at a discount) the actual NAV of the mutual fund which is being traded.

Exchange Traded Funds (ETFs) are traded on the stock market daily, just like any stock is traded. The ETFs value for every share is commonly known as its NAV or perhaps Net Asset Value for every share.

To summarise this, the dollar value per share of any mutual fund is actually computed by dividing the whole value of all securities, that are in the profile of the fund, minus any liabilities it may have, by the number of shares outstanding during the time of calculation.

The NAV per share of a mutual fund is a very important figure. Mutual fund investors must know how this particular figure is actually calculated and how to use it properly.

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