Written by Ilham Indra, Marketing Communication at PT Korea Investment Management Indonesia. Reviewed by Compliance before publication.
Net asset value is the number mutual fund holders look at most and misread most. Many assume a lower net asset value per unit means better value. It does not.
This article explains what net asset value actually measures, how it differs from net asset value per unit, and the common mistakes in reading it.
What Net Asset Value Is
Net asset value is the fair value of all a mutual fund's assets less its liabilities on a given date. It is calculated by the custodian bank on every trading day and forms the basis for valuing each investor's holding.
How Does It Differ from Net Asset Value per Unit?
Term | What it measures | Used for |
|---|---|---|
| Net asset value | The total net value of the whole portfolio | Seeing the size of assets under management |
| Net asset value per unit | Net asset value divided by units outstanding | Valuing an investor's holding |
What investors see day to day is net asset value per unit. That is the figure multiplied by the number of units you hold.
A Worked Example
The figures below are an illustration, not data from any live product.
Component | Illustrative value |
|---|---|
| Total fair value of assets | IDR 102,000,000,000 |
| Liabilities | IDR 2,000,000,000 |
| Net asset value | IDR 100,000,000,000 |
| Units outstanding | 80,000,000 units |
| Net asset value per unit | IDR 1,250 |
An investor holding 10,000 units in this illustration holds IDR 12,500,000, that is 10,000 multiplied by IDR 1,250.
Why Does Net Asset Value Rise and Fall?
Net asset value per unit changes because the prices of securities in the portfolio change. When the bonds or shares held rise in price, the value per unit rises; when they fall, it falls.
Investors entering or leaving do NOT raise or lower the value per unit, because incoming money adds assets and units outstanding in the same proportion.
When Is It Published?
Net asset value per unit is calculated by the custodian bank after the market closes on each trading day and published on the following trading day under the applicable rules. This is why a purchase made today is recorded at a value known only afterwards.
Common Mistakes in Reading It
Assuming a lower value per unit means cheaper or better value. The value per unit is only a unit of measure, not a measure of expensive or cheap.
Comparing value per unit between different funds. The figure depends on the starting value and how long the fund has run, not on the quality of management.
Treating a rising value per unit as a guarantee of further rises. Past performance does not guarantee future performance.
How a mutual fund works overall is covered in a separate article.
About the Manager
PT Korea Investment Management Indonesia is an investment manager registered with and supervised by the Financial Services Authority under licence number KEP-50/D.04/2019, operating in Indonesia since 2019
Frequently Asked Questions
What does net asset value mean?
It is the fair value of all a fund's assets less its liabilities on a given date.
Does a lower value per unit mean better value?
No. The value per unit is only a unit of measure, not a measure of cheap or expensive. It depends on the starting value and how long the fund has run.
Why does net asset value fall?
Because the prices of securities in the portfolio fall. Investors leaving the fund do not lower the value per unit.
When is it published?
It is calculated by the custodian bank after the market closes on each trading day and published on the following trading day under applicable rules.
How do I calculate what my holding is worth?
Multiply the number of Participation Units you hold by the prevailing net asset value per unit.
Who calculates it?
The custodian bank, not the investment manager. This separation keeps asset valuation out of the hands of the party managing them.
Next Steps
Understand how a mutual fund works end to end in our related article.
See the range of funds managed by PT Korea Investment Management Indonesia on the Products page.