Net Asset Value Per Share (NAVPS)
Candlefocus EditorNAVPS is important for open-end mutual funds, since it is used to determine the price of shares when they are purchased or sold back to the fund. The purchase price and the redemption price will be the same value: the fund's NAVPS. Therefore, the NAVPS can be seen as the accurate value of the fund, free from any short-term fluctuations in the market that may drive up or down the fund's share value.
However, the NAVPS may not accurately reflect the market value of a closed-end fund or an ETF. This is because share prices of these investments are actively traded like other publicly traded stocks, meaning they can be subject to short-term volatility and other market influences that may drive up the share price above its NAV.
NAVPS can be calculated by dividing the total assets of the portfolio less any liabilities by the total number of outstanding shares. This calculation does not take into account any external factors such as portfolio management fees which can reduce the overall portfolio return.
It is important for investors to understand the NAVPS of a fund before purchasing shares to ensure that they are getting the most for their money. By tracking the NAVPS, investors can also determine if the fund is undervalued or overvalued relative to its NAV, making it a useful tool for determining what price to buy and sell shares.