Net asset value or NAV is the total value in a product calculation. In each product, there will usually be this calculation, as well as mutual fund products. In mutual funds, the value of the applicable investment must be in accordance with the current regulations, which are calculated every day according to the period on the trading day of the exchange. So this time, we will discuss what is Mutual Fund NAV.

Mutual Fund NAV is the total amount of a fund under management that has been managed by the investment manager in the mutual fund product. NAV itself is calculated based on the total market price in an asset such as stocks, deposits, and debt securities in a mutual fund portfolio, which is supplemented by interest reserve financing, and minus other operational costs that we will discuss this time. For more details about this Mutual Fund NAV, you can understand it through the article below. However, register yourself first to join the Affiliate program by inviting friends or becoming an IB to get additional income.

What is NAV in Mutual Funds?

NAV itself is the amount of funds that will be managed by mutual funds, which includes cash, stocks, deposits, and bonds. This NAV is the amount of funds that will be managed by the investment manager regarding a mutual fund product that will be calculated on each trading day of the exchange.
 
NAV or Net Asset Value will show the value in the mutual fund market or the net price of a mutual fund, which will also display the development of your own investment value, which is increasing or decreasing. The total of your investment will continue to change every day of the exchange, which will depend on the performance of securities and portfolios in a mutual fund product that you already have.

There is also NAV/UP which is the price of a mutual fund. This NAV/UP will be a benchmark or reference in the price calculation of an existing mutual fund. Because if you want to transact mutual funds either by buying or selling, you also need to know how much NAV is calculated on a mutual fund to be able to estimate the number of units that will be obtained later or the estimated profit when selling mutual funds.
 
For the number of participation units of this mutual fund, the number will remain the same if you do not add or buy the mutual fund again or what is commonly referred to as top up. And it can also be reduced if you sell or redeem the mutual fund. Meanwhile, the potential profits that will be obtained will be based on the movement of the mutual fund's NAV which can change every day.

Every day on each exchange that has been completed in the trading session, the NAV of the mutual fund will be calculated by the custodian bank. The results of the NAV calculation will later be published by the investment manager who is the manager of the mutual fund portfolio and will be published in various mass media both in print and online. Before knowing the function of mutual funds, make sure you have filled out a user survey so that we can find out the satisfaction of our users about this platform itself. 

Functions in Mutual Funds

The NAV does not determine how cheap or expensive an existing mutual fund is. In accordance with the definition, this NAV is an indication of the total wealth in a mutual fund that has been managed by the investment manager. In investing in mutual funds, investors also need to know and understand what the term NAB/UP or stands for net asset value per participating unit, which is more often referred to as NAV only.

This NAV/UP will function as a benchmark and reference for price calculations in a mutual fund. Because if you want to transact mutual fund products, either by buying or selling, you need to know about how much NAV is on a mutual fund product. With the reason to be able to estimate the number of units that will be obtained later or an estimate of the profit that will be obtained when selling mutual funds with the money you want to disburse.

The number of mutual fund participation units can be fixed if you do not add or buy mutual funds again by top up. However, it can also be reduced if you sell or redeem the mutual funds you have. Meanwhile, the potential profit will be obtained based on the movement of NAV in the mutual fund, which will change every day.

 

Another function of NAV that you need to remember is that NAV can be used as more in-depth information about the mutual fund. This can be aimed at making investments that have been or will be made right and will also generate profits. You also need to remember to fill out the Trader Assessment so that you can consult about the trades you do.


Benefits in Mutual Funds

After knowing what the function of NAV itself is, this time we will also learn what the benefits of NAV itself are. We need to remember again, NAV is the basis for calculating the price of mutual fund investment units or commonly referred to as NAV/UP.

You can find out about the unit price on an investment from the mutual fund company, by only looking at the NAV/UP data of the company in question. The value of NAV/UP will change every day because it will be based on the calculation of NPW or Fair Market Value that is currently in force. Another factor that will affect this change in NAV is the change in funds managed by MI or Asset Under Management (AUM) will experience an increase in value.
 
NAB cannot provide information about the profits that will be obtained by investors through the mutual fund directly. So that this Net Asset Value or NAV has benefits that can help the smooth implementation of the investment process, which includes choosing the best.

How to Calculate

In accordance with the OJK, a company that has been involved in the stock exchange or initial public offering (IPO) will be set at a price of IDR 1,000 which is in accordance with the current regulations. The price can be said to be the basic value of NAV/UP, which then the price of the NAV/UP will undergo changes that must be in accordance with market price movements.

Therefore, the price of NAV/UP will usually change every day. In general, NAV will be calculated by adding up the total net assets of the entire fund (Assets Under Management) in the mutual fund, with then the sum will be divided by the total units in the market. For information, this total net asset comes from the market value of the types of investment instruments in mutual funds such as money market securities, bonds, deposits, and stocks.

So, the result of the overall total net assets that have been divided by the total units will be subtracted by other operational costs such as custodial bank fees, investment manager fees, and others. As another example, if a mutual fund unit has a NAV/UP of IDR 2500, then the price is the price that you must be able to pay to be able to own one mutual fund unit. Likewise vice versa, if you are investing IDR 500 thousand in the mutual fund which currently has a net asset value of IDR 2500, then you will get as many as 200 units of mutual funds.

The price at NAV/UP will continue to change according to existing market conditions, so that will make mutual funds will have different daily values. All investors will certainly make an estimate about the value of their portfolio when the stock market is about to close every day. So, the market will later open again on the next day using the stock price at the close of the previous day. Mutual fund companies will later deduct every debt and appropriate costs to be able to calculate the net asset value at that time according to the formula that has been given.

You can get a daily fee for each unit when you divide the total value of the asset by the number of units that have been issued. Because mutual funds are more open, for new investors and new withdrawals can affect the unit price of the mutual fund product. If the investment manager is considered unsuitable, then investors also have the option to be able to put in an additional amount of funds or by selling some of their shares first.

Before proceeding to find out the influencing factors in mutual funds, you can do a Preliminary Test so that you can measure how far your expertise is in trading. 

Influencing Factors in Mutual Funds

Mutual fund investment will be very suitable for those of you who are just starting out in investing. However, even though this mutual fund will be suitable for ordinary investors or who do not even know a financial product at all, especially in the capital market, then this prospective investor should know things that can affect the movement of the mutual fund. There are several factors that can affect the size of the NAV/UP price in the mutual fund investment itself. These factors include:

Increased Managed Funds

The amount of funds under management will be obtained from the funds that have been invested by investors. So, if the amount of the managed funds gets larger, it will later affect the value of NAV/UP. Thus, it can be concluded that the larger the managed funds obtained, the higher the value of the NAV/UP price of the mutual fund product. The managed funds themselves will be obtained from the many investors who are investing capital.

Change in Fair Market Value (NPW)

As reported by the official Financial Services Authority website, the change in managed funds is also influenced by the Fair Market Value (NPW). NPW is the value that has been obtained from securities transactions carried out by parties freely without coercion or liquidity. In general, this NPW is regulated by the Securities Price Assessment Institute (LPHE). The LPHE is a company that has obtained a business license from BAPEPAM and LK which is tasked with assessing the price of securities. Meanwhile, LPHE also determines fair market prices based on the transaction value of investment products. Therefore, this NPW will undergo changes every day.

Bank Indonesia Interest Rate

Another factor that affects the NAV of mutual funds is the interest rate at Bank Indonesia, the Bank Indonesia interest rate or commonly referred to as the BI rate is an interest rate that is reflecting the monetary policy at that time published by Bank Indonesia and has been announced to the public. Therefore, if Bank Indonesia's interest rate is increased, investors will choose to withdraw their funds so that they can be diverted to investment instruments that will later provide more profits. This is what makes the NAV of mutual funds will experience price fluctuations, and the profits they provide will also decrease.

Sharia Mutual Fund NAV

The Net Asset Value of this sharia mutual fund is not much different from the NAV of ordinary conventional mutual funds, but the difference lies in the application of sharia value in accordance with Islamic law in the NAV of this sharia mutual fund. In the Islamic view, everything that is muamalah or buying and selling will be allowed as long as it does not contradict the applicable Islamic sharia.
 
Moreover, currently there have been many sharia mutual fund products, which have been bound by two contracts in accordance with Islamic law, namely wakalah and mudharabah contracts. Which Wakalah is the delegation of power from one party to another party in matters that can be represented only. This contract will be valid between the financiers and the Investment Manager or investment manager of your mutual fund.

Later, the investor will give a mandate to the Investment Manager to carry out investment activities for the benefit of the investor in accordance with the provisions stated in the Mutual Fund Prospectus. In addition, there is mudharabah, where a person will give his property to another person to be able to trade with a kind of provision that the profits that will later be obtained must be shared between the two parties, according to mutually agreed terms. This agreement will be valid between the Investment Manager and the investor or customer concerned.

How to Check

It is very important for you to be able to know what NAV itself is, because it can be used as a benchmark in the investment income that you will have. By using this NAV, you can track your income on a daily, monthly or quarterly basis. Investment experts will usually recommend that investors conduct a NAV check every quarter to be able to really know the performance of their mutual funds.
 
Another very good time to be able to check this NAV is when a major event occurs, such as a rise in the stock market, a market crash, or a change in interest rates. Investors can monitor the daily performance of their mutual funds through business newspapers that contain news about national circulation, it can also be through the www.most.co.id Website, the Investment Manager website used, third-party sites for Mutual Fund NAV data providers such as Bloomberg.com, Bareksa.com, Infovesta.com and others.

After knowing what the NAV of the mutual fund itself is, make sure you also check the NAV of your mutual fund so that you can feel the benefits of the NAV itself. You can check the NAV according to the methods discussed in this article or in other ways. Thus the discussion and information that has been summarized from GICTrade regarding "NAV of Mutual Funds: Influencing Factors, Functions, and Benefits".

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