An investment fund that holds the objective to earn interest for shareholders while maintaining a net asset value (NAV) of $1 per share. Mutual funds, brokerage firms and banks offer these funds. Portfolios are comprised of short-term (less than one year) securities representing high-quality, liquid debt and monetary instruments.
Investopedia explains Money Market Fund
A money market fund's purpose is to provide investors with a safe place to invest easily accessible cash-equivalent assets characterized as a low-risk, low-return investment. Because of their relatively low returns, investors, such as those participating in employer-sponsored retirement plans, might not want to use money market funds as a long-term investment option.
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Friday, October 8, 2010
Sunday, October 3, 2010
Mutual Funds Trade At Premium Or Discount To NAV
The Net asset Value or NAV of a mutual fund is the value of the securities in the fund portfolio minus any outstanding liabilities the fund has. The NAV of the fund divided by the number of outstanding shares is the net asset value per share.
Mutual funds can trade at a premium to, or at a discount to, their Net Asset Value or NAV. The reasons for this can be complex but the main reasons usually are:
1. Supply and Demand: If shares in the fund are in strong demmand, but there is a short supply, then the fund will trade above its NAV. If demand is low or there is a plentiful supply of shares the mutual fund will trade below its NAV.
2.Expectations of Investors: If securities held in the funds portfolio are expected to do well in the near future, increased demand for the funds shares will drive the price above the NAV.
3.Management Of The Fund: If the fund has a manager who is well respected in the investment community this can create a demand for the funds shares which may drive the price above the NAV of the fund.
You can find out more about mutual fund investing at mutual fund NAV and you can find interesting articles on investing and other subjects at articles
Mutual funds can trade at a premium to, or at a discount to, their Net Asset Value or NAV. The reasons for this can be complex but the main reasons usually are:
1. Supply and Demand: If shares in the fund are in strong demmand, but there is a short supply, then the fund will trade above its NAV. If demand is low or there is a plentiful supply of shares the mutual fund will trade below its NAV.
2.Expectations of Investors: If securities held in the funds portfolio are expected to do well in the near future, increased demand for the funds shares will drive the price above the NAV.
3.Management Of The Fund: If the fund has a manager who is well respected in the investment community this can create a demand for the funds shares which may drive the price above the NAV of the fund.
You can find out more about mutual fund investing at mutual fund NAV and you can find interesting articles on investing and other subjects at articles
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