Net Asset Value (NAV)
It is the value of net assets of the funds. The Net Asset Value of the scheme sM11 be calculated and published at least in two daily newspapers at intervals of not exceeding one week. The investors' subscription is treated as the unit capital in the balance sheet of the fund and the investments on their behalf are treated as assets. The fund net assets are defined as the assets less liabilities.
NAV = Net assets of the scheme/Number of units outstanding'
Net assets of the scheme = Market value of investments + receivables + other accrued income + other assets - accrued expenses - other payables - other liabilities.
Required return from mutual funds
The small investors invest in mutual funds in expectation of certain return over and above risk free rate of return. Hence, AMC shall constitute the portfolio of investment in such a manner that it can fulfill the expectations of investors and cover the annual recurring expenses.
Minimum required return from mutual funds =
(Investors' expectations× 100/Corpus of the fund) + annual recurring expenses (in %age)
(i) Investors expectation is calculated on the basis of amount invested by them in the units.
(i) Corpus of fund means amount invested in the fund - initial expenses.
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