What is NAVPS

by Gily Tenorio on September 24, 2011

in Mutual Funds

How do you determine the price of a mutual fund? In stocks, you will easily know the price and you can see that it is changing every second when you log in in your online stock account. In the same way, mutual fund has also a price called NAVPS.

What is NAVPS?

NAVPS or net asset value per share is the price of one share in a particular mutual fund. Normally, it is the ‘net’ or the total price meaning all the taxes or fees are already paid and have been removed from it.

Once you buy a mutual fund, you must look first its NAVPS to know how many shares you can buy. For example, an equity mutual fund has a NAVPS of 3.4568 today and then you buy it with your P5,000.

Take note every time you buy a mutual fund, there’s a “sales load” which is equal to 0.5 to 2% of the money that you will use to buy the MF. In our case, it is P100 (5,000×0.02 = 100) assuming the sales load is 2%. Sales load depends on the amount of money you will use. Most of the MF companies charge a 1.5 to 2% for sales of less than P50,000.

Calculation Using NAVPS

So how many shares you can get from that money? It’s just a simple mathematics! First, you should subtract P100 (sales load) from P5,000 so the total money that you can use to buy the MF is P4,900. Second, divide 4,900 by 3.4568, so you will get 1,417.5 or just 1,417 because it should be always whole number.

So how do you know if you made a profit from your MF? Simply follow the computation below:

(Current NAVPS – Bought NAVPS) x Number of Shares = Profit

As an example, current NAVPS = 3.5983, so from data above,

Profit = (3.5983 – 3.4568) x 1,417 = 200.5

The total profit you earned is at P200.5. How about the total value of your MF?

Total Value of MF = Number of Shares Owned x Current NAVPS
= 1,417 x 3.5983 = 5,098.8

Total Value of MF = P5,098.8

Strictly speaking, you only actually earned a P98.8 profit from the P5,000 you use to buy the MF based on the computation above so it is very important to hold your mutual fund until you get at least 10% or more profit.

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Bernard October 17, 2011 at 07:46


How do I check the NAVPS regularly?


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