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Why does your NAV go down when your Mutual fund pays a dividend?
The cash the fund uses to pay the dividend is considered an asset of the investment trust. Before it is paid out, that value is added to the value of the stocks/bonds held to calculate the NAV. Once the money is paid out, it is no longer counted as part of the investment trust, thus the NAV goes down by the amount of the dividend. Example. Mutual fund A has $100 worth of stock, $50 in cash and 100 shares outstanding. It's NAV is $1.50. It pays a total dividend of $50. So now the fund has $100 worth of stock, no cash, and 100 shares outstanding. It's NAV will be $1.00.
Can you switch a few units of a fund from growth to dividend?
No. You would have to withdraw/redeem the amount you wish to take out from your growth fund and then invest afresh in the dividend option. Switching between growth and dividend is not possible directly because the NAV of the two funds will be totally different.
Is it better to purchase a mutual fund before or after they pay a dividend?
There is no big difference either ways. Let me explain with an example. Case 1: Investing before dividend payout Assuming you invest Rs. 10000/- on a fund with NAV Rs. 20/- which means you get 500 units. (I have not considered entry and exit loads for simplicity) After 1 month the company declares a 50% dividend which is Rs. 5/- per unit. Which means you get Rs. 2500/- as dividend. The NAV of the fund comes down correspondingly to Rs. 15/- per unit. After 1 year the NAV has grown to Rs. 25/- per unit, which means your total value = (25 * 500) + 2500 = 12500 + 2500 = 15000/- (We need to consider the dividend received to calculate the net value) Case 2: Investing after the dividend payout Assuming you invest Rs. 10,000/- in the same mutual fund at the NAV of Rs. 16/- (You invested after the dividend was declared) which means you will get 625 units. After one year the NAV has grown to Rs. 25/- per unit, which means your total value = 25 * 625 = 15,625/- So, if you see here, there is a difference of only Rs. 625/- at the end of the year.
Growth funds vs. dividend funds?
Growth funds are funds where your investment would grow year on year and you do not realize any gains until you surrender your investment. Dividend funds are funds where your investment would grow and at the same time you get regular earnings as form of dividends. Because dividend funds share their profit regularly, the NAV of a dividend fund is always lesser than the growth fund.
What is switch request related to mutual fund?
A Switch Request is one in which the investor takes out his money from one Mutual Fund and invests it into another fund. for ex: Let us say there is fund A and fund B which have an NAV or Rs. 20 & Rs. 15 each. The Investor holds 500 units of Fund A and wants to switch to fund B. Step 1: Sell units from fund A at current NAV -> Rs. 10,000 in cash Step 2: Buy units from fund B at current NAV -> 666.67 Units of fund B owned now A point to note here is that I have not considered any entry or exit loads and the number of units of fund B you will get will change depending on the loads involved
What does G or D followed after every funds name?
G stands for Growth D stands for Dividend Let us say there are two funds each with NAV Rs. 10. Assuming both collect a corpus of Rs. 10 lakhs and invest in the stock markets. At the end of the year, both funds made a decent profits and their corpus stands at Rs. 15 lakhs each. Fund A declares a dividend of Rs. 4 per unit and hence people who invested in it get some money. The NAV falls to Rs. 11 and the corpus falls to Rs. 11 lakhs. This is called a dividend and this fund A is a 'D' fund Fund B does not declare any dividend and continues to invest the Rs. 15 lakhs. This is a 'G' fund. Only when you want your money, you will get it. Until then, the money would remain with the fund house
NAV of mutual funds?
NAV stands for Net Asset Value. Assuming a fund house starts with an initial corpus of $100,000/- and sells 10,000 units to its investors its initial NAV is $10. After the initial period, the fund manager starts investing in stocks and lets say after 3 months the total worth of his portfolio is $125,000/- it means that the value of each unit has gained by $2.5 and hence the NAV of the fund is $12.5 NAV is the current market worth of the investments under the funds portfolio
A mutual fund has total assets of 57000000 and liabilities of 8550000 If 15960000 shares are outstanding what is the net asset value of the fund?
Net Asset Value or NAV = current market value of fund's investments - current liabilities / number of shares outstanding
What is difference between growth fund and dividend fund?
Equity funds usually offer three options for investors to choose from - the Dividend Payout option, the Dividend Re-investment option and the Growth option. A few funds have also started to offer a Bonus option. These options differ only in their method of distribution of returns. When you choose the dividend option, you get to partially cash in on the returns earned by the fund from time to time, through the dividends it declares. When you choose the growth option, the returns earned by the fund are retained and reflect as an appreciation in the fund's Net Asset Value (NAV). Please note that the dividend does not in any way, add to your returns from the fund. The Dividend Re-investment option authorises the fund to plough back the dividends declared into the fund at the prevailing NAV, fetching you more units. In terms of its effect on your returns from the fund, the Dividend Re-investment option is no different from the Growth option. The Dividend Re-investment option is the superior option for investors who want the tax efficiency of the dividend option and are also willing to remain invested in equities through its ups and downs. If they need liquidity, such investors can liquidate a part of their holdings at NAV. To illustrate how these options work, let us suppose you invested Rs.1000 in a fund at an NAV of Rs.10 per unit, fetching you 100 units. Six months later, because of an appreciation in the fund's portfolio, the value of the units you hold has grown to Rs 1,200. In the Dividend option, the fund may declare a dividend of Rs 2 per unit and pay out Rs 200. The value of your residual holdings in the fund would be Rs 1000. In the Growth Option, you would not receive any payout, but the value of your holdings would be Rs 1,200 at the end of six months, as the value of the100 units you hold would have grown from Rs 10 to Rs 12 per unit. In the Dividend Re-investment option, the Rs 200 declared as dividends would be reinvested in the fund at the prevailing ex-dividend NAV, and you would be left with 120 units worth Rs.10 each. Your investment value at Rs 1,200, would be the same as in the Growth option. The Dividend option (whether Reinvestment or Payout) is the more tax- efficient way of receiving your returns from an equity fund. The dividends declared by an equity fund (funds with over 50 per cent equity exposure) are exempt from distribution tax and are also tax-free in the hands of an investor. But any returns that you earn on the fund by way of appreciation in NAV, is subject to capital gains tax. Capital gains are taxed at 10 per cent if you hold the fund for less than a year; but are exempt if you hold for over one year. In the above example, if you opted for Dividend Payout, you would have no tax liability at the end of the six-month period. The same would hold good of the Dividend Re-investment option. However, if you sell your units in the Growth option at the end of the six-month period, you would have to pay short term capital gains tax of 10 per cent on the Rs.200 you earned by way of appreciation on the Growth Option NAV. Tax reasons apart, choosing the Dividend Option may also confer other advantages for conservative investors. Equity funds declare dividends only from the profits booked on the holdings in their portfolio. They have tended to pay out liberal dividends when the stock markets are in a buoyant phase and refrain from payouts when the markets are in a bearish phase. Dividend payouts thus offer you the opportunity to cash in partially on any returns that the fund has made, after a sharp run-up in stock prices. Dividend payouts also help you re-balance your equity holdings when the markets are buoyant, guarding you to an extent against a decline in values. The flip side in opting for the Dividend Option is that they could result in an opportunity loss in a rising market. In the above example, if the NAV of the fund climbed from Rs 12 to Rs 15 per unit after the dividend declaration, investors who opted for Dividend Payout would have suffered an opportunity loss on the Rs 200 that they have pulled out of the fund by way of dividend. Their appreciation would be restricted to the Rs 1,000 they have invested in the fund. In contrast, investors who have opted for the Growth and Dividend Re-investment option would have earned an appreciation on the entire sum of Rs 1,200 that they retained in the fund.
Whats difference between nav and nav history.?
NAV stands for Net Asset Value, that is the net assets that a fund has, while NAV history is the evolution of NAV over time.
Does a paydown of a mbs security impact the NAV of a Mutual fund?
No. They are totally unrelated to affect the NAV
What is NAV?
NAV stands for Net Asset Value, which represents the per-share value of a mutual fund or an exchange-traded fund (ETF). It is calculated by subtracting the fund's liabilities from its assets and dividing by the number of outstanding shares. NAV can be used to determine the price at which investors buy and sell mutual fund shares.
