Unit Trusts: Understanding NAV Pricing and Fees
Learn how unit prices are based on the fund's NAV divided by units outstanding, and how fees like subscription charges and management fees apply.
How Unit Prices Are Determined
The unit price is based on the fund’s net asset value (NAV) divided by the number of units outstanding. The price of each unit is derived from the fund’s NAV.
Pricing Methods and Charges
In the bid and offer pricing method, the subscription charge is added to the NAV per unit, while the redemption charge is deducted from the NAV per unit.
Management Fees
Actively managed funds charge management fees ranging from 1.0% to 2.0% per annum of the fund’s NAV, while passively managed funds generally charge management fees below 1%.
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FAQ
Q1: What is the basis for a unit trust’s unit price?
The unit price is based on the fund’s net asset value divided by the number of units outstanding.
Q2: How do management fees differ between active and passive funds?
Actively managed funds typically charge management fees of 1.0% to 2.0% per annum of the fund’s NAV, while passively managed funds generally charge below 1%.