Author Topic: Mutual Funds - Importance of Price per Share  (Read 1348 times)

5pak

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Mutual Funds - Importance of Price per Share
« on: December 20, 2014, 11:58:24 AM »
Hello. I'm newly registered to the forum, specifically because I have a question regarding mutual funds. From what I've seen, this forum is very helpful in this area. My question is how important the price per share of a mutual fund is.

I'm a new investor. I only recently opened an account with Vanguard and currently have money in two funds: a Target Retirement Fund (which is my IRA account) and the Vanguard S&P500 fund (which is my regular investment account). I've done research into the foundational knowledge of mutual funds (I've read Benjamin Green and John Bogle, in other words), and I have an investment buddy whom I chat with, but this is one issue I've not yet really seen answered to my satisfaction. And seeing how much higher price per share is for the S&P500 than for, say, a fund like Windsor II, which is comparable as far as I can tell, I'm curious about how important price per share is to a fund and what difference it makes in performance.
« Last Edit: December 20, 2014, 03:52:52 PM by 5pak »

slugline

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Re: Mutual Funds - Importance of Price per Share
« Reply #1 on: December 20, 2014, 02:25:10 PM »
Price-per-share or net-asset-value (NAV) of a single share of a mutual fund is important for the fund managers because they are required to be able to show that the NAV multiplied by the number of shares outstanding is the same as the net assets owned by the fund.

But it has very little meaning to an investor as far as I can tell.

marty998

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Re: Mutual Funds - Importance of Price per Share
« Reply #2 on: December 20, 2014, 08:21:48 PM »
It's just a number, simply the total value of the fund divided by the number of units on issue.

Doesn't really mean much on its own.