Mutual funds trade at a share price which changes daily. The Net Asset Value per share of any fund is calculated daily from the closing market prices of the various securities held in the portfolio. Buy and sell orders are priced based on the NAV on the date the trade takes place. The investor will get this price on the next day following the trade.
A mutual funds, Net Asset Value (NAV) per share is computed once every day from the closing market prices of the portfolio of securities held by the fund. All buy or sell orders are carried out at the NAV on the date of the trade. However,investors will not know the actual trade price till the following day. Changes in the NAV are important but are really not the way to determine the performance of a fund.
Funds pay out their income and capital gains to shareholders of the fund. As a result of this practice, changes in NAV are not a good measure of the mutual fund's performance, which may best be measured from the annual total return on the investments of the fund.
ETFs and closed end mutual funds are traded daily on the stock market just like stocks. The result is that their shares trade at market value, which may sometimes be above (ie trading at a premium) or in some intances below ( ie trading at a discount) the true Net Asset Value or NAV of the particular fund.
Exchange traded funds (ETFs) are mutual funds which trade daily just like stocks on the stock market. The share value of an ETF is known as its Net Asset Value or NAV price per share, or exchange traded fund's (ETF) per share value. In each case, the per share dollar value of a fund is computed by dividing the total value of all of the securities in the portfolio of the fund, less any liabilities which the fund may have, by the number of fund shares outstanding at the time of calculation.
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