What is a mutual fund's NAV?

Mutual Funds
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July 2016
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The explanation provided here by Investopedia is well-stated. However, in more simple terms, the NAV is simply the price per share of the fund. Similarly to how stocks have a stock price, mutual funds have an NAV (net asset value). So, if you want to purchase one share of a mutual fund, you will purchase at the NAV. One difference between a mutual fund NAV and stock price is that the NAV will not change throughout the day like a stock price will. The NAV is updated at the end of each trading day. So, when you purchase a mutual fund at a listed NAV price, that listed price is actually the price as of yesterday's close. Therefore, your purchase will be based on the updated NAV at the end of the CURRENT trading day. Because of this, you may not know the exact NAV when you buy or sell shares.

It's important to know this because, for example, if you want to buy $10,000 worth of mutual fund ABCDX, and the NAV as of yesterday's close was $100, that would mean you purchase 100 shares. However, if the NAV increases drastically on the day you made your purchase, you would actually be purchasing more than the 10,000 you originally planned. For this reason, you can also buy or sell in "$" instead of "shares." This will help prevent that issue.

I hope this additional information was helpful for you, and good luck!

Joe Allaria, CFP®

July 2016
March 2005