CMA Final · Strategic Financial Management · Mutual Funds
A fund has a portfolio market value of Rs 120 crore, other assets of Rs 3 crore and liabilities of Rs 3 crore at the start of a month. During the month it declares an expense ratio of 0.1% of opening net assets (monthly), paid in cash from assets. Units outstanding are 4 crore and no other change occurs in portfolio value. What is the NAV per unit at month-end?
NAV at month-end is Rs 29.97. Opening net assets are Rs 120 crore; the monthly expense of 0.1% removes Rs 0.12 crore, leaving Rs 119.88 crore, which divided by 4 crore units gives Rs 29.97. Ignoring expenses would leave NAV at Rs 30.
- ARs 29.97Correct
- BRs 30.00
- CRs 29.88
- DRs 30.03
Explanation
Opening net assets = 120 + 3 - 3 = Rs 120 crore. Expense = 0.1% x 120 = Rs 0.12 crore. Closing net assets = 119.88 crore. NAV = 119.88/4 = Rs 29.97. Rs 30.00 ignores the expense.
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