The Net Asset Value (NAV) of the fund is the cumulative market value of the assets of the fund net of its liabilities. NAV per unit is simply the net value of assets divided by the number of units outstanding. Buying and selling into funds is done on the basis of NAV-related prices.
The NAV of a mutual fund are required to be published in newspapers. The NAV of an open end scheme should be disclosed on a daily basis and the NAV of a close end scheme should be disclosed at least on a weekly basis
The Introduction of Loads:
A Load is a charge, which the mutual fund may collect on entry and/or exit from a fund. A load is levied to cover the up-front cost incurred by the mutual fund for selling the fund. It also covers one time processing costs. Some funds do not charge any entry or exit load. These funds are referred to as ‘No Load Fund’.
Funds usually charge an entry load ranging between 1.00% and 2.00%. Exit loads vary between 0.25% and 2.00%. For e.g. Let us assume an investor invests $. 10,000/- and the current NAV is $.13/-. If the entry load levied is 1.00%, the price at which the investor invests is $.13.13 per unit. The investor receives 10000/13.13 = 761.6146 units. (Note that units are allotted to an investor based on the amount invested and not on the basis of no. of units purchased).
Let us now assume that the same investor decides to redeem his 761.6146 units. Let us also assume that the NAV is $ 15/- and the exit load is 0.50%. Therefore the redemption price per unit works out to $. 14.925. The investor therefore receives 761.6146 x 14.925 = $.11367.10.
Like the stocks are traded based on its market price, the MFs are traded based on their NAVs. Hence it’s worth knowing.
The NAV of a mutual fund are required to be published in newspapers. The NAV of an open end scheme should be disclosed on a daily basis and the NAV of a close end scheme should be disclosed at least on a weekly basis
The Introduction of Loads:
A Load is a charge, which the mutual fund may collect on entry and/or exit from a fund. A load is levied to cover the up-front cost incurred by the mutual fund for selling the fund. It also covers one time processing costs. Some funds do not charge any entry or exit load. These funds are referred to as ‘No Load Fund’.
Funds usually charge an entry load ranging between 1.00% and 2.00%. Exit loads vary between 0.25% and 2.00%. For e.g. Let us assume an investor invests $. 10,000/- and the current NAV is $.13/-. If the entry load levied is 1.00%, the price at which the investor invests is $.13.13 per unit. The investor receives 10000/13.13 = 761.6146 units. (Note that units are allotted to an investor based on the amount invested and not on the basis of no. of units purchased).
Let us now assume that the same investor decides to redeem his 761.6146 units. Let us also assume that the NAV is $ 15/- and the exit load is 0.50%. Therefore the redemption price per unit works out to $. 14.925. The investor therefore receives 761.6146 x 14.925 = $.11367.10.
Like the stocks are traded based on its market price, the MFs are traded based on their NAVs. Hence it’s worth knowing.
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