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.