How do you find out the price of a mutual fund?

By Investopedia Staff AAA
A:

The easiest way to find out the price of a mutual fund is to look at its net asset value (NAV). NAV is the total value of a mutual fund's assets, less all of its liabilities. Many mutual funds use this number to determine the price for transacting units of the fund. When you buy and sell mutual funds, you typically do so at the NAV.

For most mutual funds, the NAV is calculated daily since a mutual fund's portfolio consists of many different stocks. As each one of these stocks may be changing in price frequently throughout the day, an exact value of a mutual fund is difficult to determine. Thus, mutual fund companies have chosen to value their portfolio once daily, and each day this is the price at which investors must buy and sell the mutual fund. The exact valuation technique may vary from fund to fund as some may use an average of the last three traded prices. All mutual funds, however, set a valuation of their NAV once a day.

In the case of an exchange-traded fund (ETF), which is an index fund that trades like a stock, the NAV is first determined when the fund is created, and then market forces determine the price of the shares of the fund. Typically, the NAV of an ETF will be relatively close to the market price of the fund; however, there may be instances when the price is higher or lower than the NAV.

RELATED FAQS

  1. Why do index funds tend to have low expense ratios?

    Understand what an index fund is and why the nature of index funds causes them to have lower expense ratios than more actively ...
  2. Why is a mutual fund's expense ratio important to investors?

    Understand the nature of mutual fund expense ratios, and learn why it is critically important for investors to be aware of ...
  3. What kinds of expenses are included in the expense ratio?

    Understand the variety of costs and charges that are included in the total expense ratio assessed to investors using mutual ...
  4. What are common mutual funds an investor should consider for investing in banks?

    Discover some of the mutual funds that are most popular with analysts and investor for investing in the banking industry ...
RELATED TERMS
  1. Dividend

    A distribution of a portion of a company's earnings, decided ...
  2. Sharpe Ratio

    A ratio developed by Nobel laureate William F. Sharpe to measure ...
  3. Historic Pricing

    A method for calculating the value of an asset using the last ...
  4. Bear Fund

    A mutual fund designed to provide higher returns when the market ...
  5. Ulcer Index - UI

    An indicator developed by Peter G. Martin and Byron B. McCann ...
  6. Investment Company Act Of 1940

    Created in 1940 through an act of Congress, this piece of legislation ...

You May Also Like

Related Articles
  1. Professionals

    Should Investors Nix Actively Managed ...

  2. Mutual Funds & ETFs

    Are These 2015's Most Promising Mutual ...

  3. Professionals

    State Street Slashes ETF Fees

  4. Stock Analysis

    Will Spinoffs Give American Capital ...

  5. Mutual Funds & ETFs

    Pimco and Vanguard: A Tale of Two Fund ...

Trading Center