Net asset value-exchange traded funds

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Reference no: EM13951630

Net Asset Value (NAV) of a mutual fund is calculated every day. The book suggests that a closed-end fund (a fund that has a fixed number of shares) can trade above or below the NAV. So the cost of investing in (or removing your investment from) a mutual fund can be different than the NAV. That seems odd –and yet it is true. Why does this happen and why does it make perfect sense? Also, there are a variety of other options that investors can utilize to obtain the diversification benefits other than mutual funds. As an example, someone could invest in Exchange Traded Funds (ETF) or an investment company such as Berkshire Hathaway. Are these options superior to mutual funds? If so, how? If not, why not?

Reference no: EM13951630

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