A mutual fund’s price is the same as its net asset value. It is determined once a day after the stock markets have closed (at 4:00 p.m. EST in the US).
However, there is no clear deadline for when a mutual fund must update and provide data, so the timing may vary (the only requirement is to provide information till the end of the day).
What is a mutual fund?
A mutual fund is a pool of funds invested in securities on stock exchanges. Typically, such funds are registered as open-end investment companies with the Securities and Exchange Commission (SEC).
Mutual funds are managed by professional fund managers who are responsible for distributing the fund’s assets and generating income from the invested capital. Typically, a mutual fund’s portfolio is structured and diversified to minimize risk and pursue the goal of making a profit.
Mutual funds offer individual investors the opportunity to invest their money in a professionally managed portfolio, which means that all investors benefit as much as they lose from the actions of the fund.
Because mutual funds invest money in a large number of securities, the change in the value of mutual funds (i.e. the result of the mutual fund’s activity) is usually reflected in a change in the mutual fund’s price (net asset value).
How investors earn a return from mutual funds?
In a general sense, there are three different ways investors get their income from mutual fund activity. Here they are:
- Investors can get their income as dividends on stocks and interest on bonds that are in the fund’s portfolio. The fund can either pay dividends or invite investors to reinvest their profits to get a larger share of the fund’s capital.
- A fund may also sell securities and earn income from changes in their price. In such a case, a mutual fund may also pay dividends, or offer investors an opportunity to raise their stake in the fund.
- Likewise, investors can sell their shares of mutual funds and earn a return on changes in their prices.
What time do mutual funds update their net assets value (NAV)?
The time of change in the price of a mutual fund depends on the time of trading cessation, but does not occur at the same time. Trading ends at 4:00 p.m. EST in the US and funds must update their net asset value (NAV) by the end of the day.
In general, mutual funds can set any deadline, but usually the NAV publication time depends on when the information is published. That’s why usually almost all mutual funds update their net assets value (NAV) between 17:00 EST and 18:00 EST.