Calculate the net asset value of an ETF with portfolio holdings equal to $100 per share in market value and an expense ratio of 0.25%

Question

Brendon

Business

6 August, 19:17

Calculate the net asset value of an ETF with portfolio holdings equal to $100 per share in market value and an expense ratio of 0.25%

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Answers (1)

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Cason Meyers · Answer 1

Net Asset Value of ETF = $99.75

Explanation:

Net asset value of an ETF

The net asset value of an ETF represents the value of each share's portion of the fund's underlying assets and cash at the end of the trading day. ETFs calculate the NAV at 4:00 p. m. Eastern Time after the markets close. The NAV is used to compare the performance of different funds, as well as for accounting purposes. The ETF also releases its current daily holdings, amount of cash, outstanding shares, and accrued dividends, if applicable. For investors, ETFs have the advantage of being more transparent. Mutual funds and closed-end funds do not have to disclose their daily holdings. In fact, mutual funds usually disclose their holdings only quarterly.

Calculation

Market Value per share = $100

Expense Ratio = 0.25%

Net Asset Value = Market Value per share * (1 - Expense Ratio)

Net Asset Value = $100 * (1 - 0.0025)

Net Asset Value = $100 * 0.9975

Net Asset Value = $99.75