Investors often get confused about the decimal places in the Net Asset Value (NAV) of various mutual funds that they have in their portfolio. One thing that a lot of them notice is that the number of decimal places is not uniform as some of them have the values upto two decimal places while others have four decimal places. A proper understanding of these details is essential if one has to know what the numbers mean and when these are significant and when they can be ignored. This will enable the investor to focus on the appropriate aspects while investing. Here is a detailed look at the entire issue and how this actually works.
Decimal places
The NAV represents the value of the units that are held by an investor in a mutual fund scheme. Unlike a share price where there is rupees and paise so one is able to know the exact value of the shares and its traded value the situation in case of a mutual fund NAV is different. There can be more than two decimal places in the NAV of the fund and this is nothing but a deeper reflection of the value of the holdings in the mutual fund. There is however a lot of confusion among investors when they see different decimal places as they wonder how this can actually be implemented but this is more for convenience in transacting.
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