Fund price is the standard to measure the value of the fund and the reflection of the value of the fund. Investors will find that sometimes the fund price is lower than the net value. So what is the reason for this phenomenon? Today we will discuss together the reasons why the fund price is lower than the net value.

The reasons why the fund price is lower than the net value

1. Closed-end funds

For closed-end funds, the fund price lower than its net value refers to the closed-end fund. A fund's intrinsic value is higher than its market price.

1) The first possible reason is that closed-end funds cannot be subscribed and redeemed at any time like open-end funds, so its price is lower than its intrinsic value, which implies that the fund will be Risk;

2) The second possible reason is that there are a large number of investors in the financial market who are unable to obtain internal information and irrationally treat noise as information for trading. Their behavior has an impact on the stock price. The impact is huge, which limits the conduct of arbitrage trading.

2. Open-end funds

The net value of fund shares refers to the total property value of the fund calculated based on the market closing price on each open day, excluding various costs and expenses of the fund on that day. Then, the obtained net asset value of the fund on that day is divided by the total number of fund units issued by the fund on that day.

The biggest reason for open-end funds should be that the cumulative net value of the fund is equal to the sum of the net value of the shares on that day and the cumulative dividends and dividends since the fund was established.

The net value of some fund units is lower than the face value but the cumulative net value is high. This is because the cumulative net value of the fund is equal to the net value of the fund unit after deducting dividends.

That’s all the above about the reasons why the fund price is lower than the net value. I hope it will be helpful to everyone. Warm reminder, financial management is risky, so investment needs to be cautious.