Mutual Funds
A Mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invest it in stocks, bonds, short-term money market instruments. It is a US name for a unit trust. In simple words you can say it is like a company which brings together a group of people and invest their money in stock, bonds, securities in a systematic manner.
Now a days Mutual funds are consider as a one of the best investments compare to all others they are very cost efficient and also very easy to invest in. The biggest advantage of Mutual funds is diversification by minimizing risk and maximizing returns.
What is Mutual Fund's NAV
NAV is Net Asset Value and it represents a fund's per share market value. This is the price at which investor buy ( bid price ) fund share from a fund company and sell ( redemption ) them to a fund company.
It is derived by dividing the total value of all the cash and securities in a fund's portfolio, minus liabilities ( if any ), by the number of shares outstanding. An NAV computation is under taken once at the end of each trading day based on the closing market prices of the portfolio's securities.
Let's we understand with an example,
If a fund has assets of Rs 50 lacs and liabilities of Rs 10 lacs, it would have a NAV of Rs 40 lacs.
Now, this number is important to investors. because it is from NAV that the price per unit of a fund is calculated. By dividing the NAV of a fund by the number of outstanding units, you are left with the price unit. In our example if fund had 4 lacs shares outstanding than the price per share value would be 40 lacs divided by 4 lacs which is equal to Rs 10.
A Mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invest it in stocks, bonds, short-term money market instruments. It is a US name for a unit trust. In simple words you can say it is like a company which brings together a group of people and invest their money in stock, bonds, securities in a systematic manner.
Now a days Mutual funds are consider as a one of the best investments compare to all others they are very cost efficient and also very easy to invest in. The biggest advantage of Mutual funds is diversification by minimizing risk and maximizing returns.
What is Mutual Fund's NAV
NAV is Net Asset Value and it represents a fund's per share market value. This is the price at which investor buy ( bid price ) fund share from a fund company and sell ( redemption ) them to a fund company.
It is derived by dividing the total value of all the cash and securities in a fund's portfolio, minus liabilities ( if any ), by the number of shares outstanding. An NAV computation is under taken once at the end of each trading day based on the closing market prices of the portfolio's securities.
Let's we understand with an example,
If a fund has assets of Rs 50 lacs and liabilities of Rs 10 lacs, it would have a NAV of Rs 40 lacs.
Now, this number is important to investors. because it is from NAV that the price per unit of a fund is calculated. By dividing the NAV of a fund by the number of outstanding units, you are left with the price unit. In our example if fund had 4 lacs shares outstanding than the price per share value would be 40 lacs divided by 4 lacs which is equal to Rs 10.
