Why can't mutual fund NAV be updated in real-time?

Question

If all holdings of mutual funds are disclosed to the public, why can't mutual funds (specifically equity funds) create real-time NAV indicators based on the weighted average of all equity holdings as opposed to averaging NAV every day?

Answer 1

A firm could estimate, but an exact NAV is not technically feasible.



Mutual funds are trading large blocks of stock. Many brokers report at the end of the trading day rather than partial executions throughout the day.



Subscriptions and redemptions are collected from a variety of sources; direct sales, brokerage sales, third party advisors, etc. Those are usually not known until the end of the day.



Most investors do not realize that US mutual fund NAVs are calculated using a convention called "T2 holdings". Prices are from today, but holdings are from the previous business day. This is done because NAV calculations must be delivered within 2 hours of market close, which is not enough time for a full accounting cycle.

Answer 2

1

Answer 3

The NAV is immaterial at the same time deciding upon a fund. Moreover, there is no change between the progress and dividend reinvestment options in phrases of total returns. One need to keep in mind that NAV is extraordinary from the rate of a inventory. A inventory's fee, in contrast to NAV, is influenced by using the forces of demand and supply, outside causes similar to perception and investor sentiment. The motive you will have to buy right into a distinct scheme is as a result of its efficiency knowledge and not its unit price. Say you buy one fund with a high NAV and an extra with a minimize NAV, however more models. Anticipate each perform in a similar fashion, upon selling the two funds, the return on funding shall be identical. For that reason whether or not the NAV is excessive or low, or whether or not you get more models or much less units, is beside the point. What concerns is the funding variety of the scheme and the returns it generates.

Answer 4

That's meaningless. Equity based mutual fund invests in stocks and keeps fluctuation every second. The equity fund holds 100's of stocks, some go up and some go down, the movement in fund price is very very small, only may be a fraction of a cent. What good does that do to you when you see your fund unit increases from $10 to $10.001 or down to $9.9999.

Answer 5

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