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

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

Every purchase and sell order, for shares of mutual funds, is priced based on the NAV on the day of the trade. The actual investor will not actually have the trade price at which this kind of transaction happened till the next day.

Mutual Fund by definition pay out all of their earnings and capital gains to their share holders. Because of this, the changes in the NAV of any fund are definitely not the easiest method to gauge their performance. The actual performance could be best measured by the annual total return.

Closed end mutual funds and ETFs are generally 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 (for instance trading at a premium) or occasionally below ( for instance trading at a discount) the actual NAV of the funds which is being traded.

Exchange Traded Funds (ETFs) are traded on the stock exchange market daily, just like any stock is traded. The actual ETFs value per share is also commonly known as it’s NAV or perhaps Net Asset Value per share.

To summarise this, the dollar value per share of any mutual fund is computed by dividing the total value of all securities, which are in the stock portfolio of the fund, minus any liabilities it may have, by the number of shares outstanding during calculation.

The Net Asset Value per share of a mutual fund is a very critical figure. Mutual fund investors must know how this kind of figure is calculated and how to use it appropriately.

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