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. Is it a good idea to buy mutual funds from banks?

    Mutual funds offer consumers a great way to access a professionally-managed group of assets at a relatively low cost, with ...
  2. What do the different types of mutual fund classes mean?

    When checking for different quotes on mutual funds, you might see different prices for classes of mutual fund shares that ...
  3. Do ETFs have a board of directors?

    Yes. An exchange-traded fund (ETF) is a type of security that tracks a basket of assets or an index (such as an index fund), ...
  4. What advantages do exchange-traded funds have over mutual funds?

    Exchange-Traded Funds (ETFs) are growing ever more popular, as they were created to combine the best characteristics of both ...
RELATED TERMS
  1. Bear Fund

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

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

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

    Investopedia explains: A Product Portfolio is the collection ...
  5. Sharpe Ratio

    A ratio developed by Nobel laureate William F. Sharpe to measure ...
  6. Target-Date Fund

    A mutual fund in the hybrid category that automatically resets ...
comments powered by Disqus
Related Articles
  1. Cut Your Tax Bill With Donor-Advised ...
    Taxes

    Cut Your Tax Bill With Donor-Advised ...

  2. Can High Fund Returns Be Deceiving?
    Mutual Funds & ETFs

    Can High Fund Returns Be Deceiving?

  3. An Introduction To Target Date Funds
    Retirement

    An Introduction To Target Date Funds

  4. What Will Become of Berkshire Hathaway ...
    Investing News

    What Will Become of Berkshire Hathaway ...

  5. Are Mutual Funds Doomed?
    Mutual Funds & ETFs

    Are Mutual Funds Doomed?

Trading Center