A:

A mutual fund's price, or its net asset value (NAV), is determined once a day after the stock markets close at 4 p.m. EST (Eastern Standard Time) in the United States. While there is no specific deadline for submitting NAVs to regulatory organizations and media, mutual funds determine their NAVs typically between 4 p.m. and 6 p.m. EST.

Mutual and Closed-End Funds

A mutual fund represents a pool of funds invested in various securities traded on equities exchanges. Mutual funds are typically registered with the Securities and Exchange Commission (SEC) as open-end investment companies and must report their NAVs every trading day. Open-end mutual funds can issue any number of shares that can be purchased by any number of investors.

In contrast, closed-end funds, whose shares are not redeemable and are issued at a fixed amount, are exempt from the requirement to report their NAVs daily. For open-end funds, NAVs change with portfolio value changes and also with the number of shares outstanding. For close-end funds, NAVs change only with fluctuations in the value of the portfolio.

Net Asset Value Calculations

A mutual fund calculates its NAV by determining the closing or last quoted price of all securities in its portfolio and their worth; it then deducts any fees or expenses. After that, a mutual fund divides its portfolio's value by its total shares outstanding. Most mutual funds have self-imposed NAV reporting deadlines, which are closely tied to the cut-off times for NAV publications in newspapers and other publications. This is typically around 6 p.m. EST. The reported NAV represents the price a buyer pays or a seller will receive for a fund's share the next trading day after deducting any commissions and brokerage fees.

RELATED FAQS
  1. How is NAV used for oil, gas, and energy investments?

    Find out how net asset value, or NAV, can be useful for evaluating mutual funds with oil, gas and energy investments or valuing ... Read Answer >>
Related Articles
  1. Investing

    A Guide to Mutual Funds Trading Rules

    Make sure to review this guide on the dos and don'ts of mutual fund trading before you invest, including how trades are executed and which fees to look out for.
  2. Investing

    Trading mutual funds for beginners

    Learn the basics about mutual funds, including the types of strategies available and the different fees they may charge.
  3. Investing

    How liquid are Fidelity mutual funds?

    Review the liquidity features of mutual fund shares and an overview of Fidelity mutual funds. Most investors look for convenient access to their investments.
  4. Investing

    Closed-End vs. Open-End Funds

    Open-end products may be a safer choice than closed-end, but closed-end funds might produce a better return.
  5. Investing

    Trading Mutual Funds for a Living: Is It Possible?

    Find out why trading mutual funds for a living isn't your best bet, including how funds discourage short-term trading and which options may better serve you.
  6. Investing

    What You Need to Know About Mutual Funds

    Mutual funds are a good investment opportunity, but investors should know how they operate.
  7. Investing

    The Advantages and Disadvantages of Mutual Funds

    As with most investments, mutual funds have both advantages and disadvantages.
  8. Investing

    Looking to Buy Mutual Funds Online? Here Is How

    Learn how to buy mutual funds online; discover which websites offer mutual fund trading services, how to choose a fund and typical fees.
RELATED TERMS
  1. Mutual Fund Timing

    Mutual fund timing is the practice of trading mutual funds according ...
  2. Mutual Fund

    Mutual funds combine money from many investors to invest in a ...
  3. Discount to Net Asset Value

    Discount to net asset value (NAV) is a pricing situation that ...
  4. Investment Company

    An investment company is a corporation or trust engaged in the ...
  5. Forward Pricing

    Forward pricing is an industry standard for mutual funds developed ...
  6. Management Investment Company

    A management investment company is a type of investment company ...
Trading Center