Announcement

Collapse
No announcement yet.

Investment Question

Collapse
X
Collapse
 
  • Page of 2
  • Filter
  • Time
  • Show
Clear All
new posts
Previous 1 2 template Next
    #1

    Investment Question

    Sea-Tax and Veritas - or anyone else who knows. Veritas, where have you been??

    Most of my funds report performance, and I have one in front of me which shows one-year, five-year, and ten-year performance. Each period shows a number for "NAV" and "POP."

    What are the meaning of "NAV" and "POP?"

    Typically, there is a difference of appx 1.0% or thereabouts between these two. NAV always seems to be higher than POP but I don't know that this is universally true since I don't know what they are.

    The "gap" between NAV and POP for the last year, however is 3.2%.

    Anything significant in this??
    Tags: None
    #2
    I haven't looked to see about POP, but I think NAV is net asset value.

    LT
    Only in government or politics is a "cut in spending" really an increase. It's just not as much of an increase as they wanted it to be, therefore a "cut".

    Comment

      #3
      Yes, NAV is Net Asset Value, usually the share value of a mutual fund. I am also not sure about POP, but might be Percentage of ???. Which brokerage's statement are you looking at?

      Comment

        #4
        NAV

        Mutual funds must calculate the price of their shares every business day. Investors can sell (redeem) some or all of their shares any time and receive the current share price. The share price, called the net asset value (NAV), is the market value of the fund's securities, minus expenses, divided by the total number of shares outstanding. The NAV changes as the value of the underlying securities rise or fall, and as the fund changes its portfolio by buying new securities or selling existing ones.

        POP

        The public offering price (POP) is an indicator of what you'd pay to buy a share of a mutual fund. It's based on the NAV plus the fund's sales charge. For no-load funds, the NAV and POP will be the same. On funds with loads, that charge is included in the POP.

        Comment

          #5
          Originally posted by JSLATER View Post
          POP

          The public offering price (POP) is an indicator of what you'd pay to buy a share of a mutual fund. It's based on the NAV plus the fund's sales charge. For no-load funds, the NAV and POP will be the same. On funds with loads, that charge is included in the POP.
          I am enlightened. Thank you!

          Comment

            #6
            Fee

            Originally posted by JSLATER View Post
            The public offering price (POP) is an indicator of what you'd pay to buy a share of a mutual fund. It's based on the NAV plus the fund's sales charge. For no-load funds, the NAV and POP will be the same. On funds with loads, that charge is included in the POP.
            Thank you for responding, J Slater.

            Based on your comment, and the fact that the "gap" between these two measurements has increased from around 1.0% historically to 3.2% in 2008, is it then reasonable to assume that this fund is charging more in fees than in prior years?? or is it a mathematical quirk that happens when funds lose (rather than gain) in value? My mind as a feeble mathematician tells me the fee has increased...

            If that is the case, I'm bailing out of that fund. They have no right to triple their fee to cover their recession problems while I've lost 50% of fund balance in the last 18 months.

            Comment

              #7
              The acronym seems very descriptive.
              Looks like the difference between the Net Asset Value and the Public Offering Price is what the load funds try to POP you for, if they can get away with it.
              "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith

              Comment

                #8
                Pops

                Originally posted by JohnH View Post
                The acronym seems very descriptive.
                Looks like the difference between the Net Asset Value and the Public Offering Price is what the load funds try to POP you for, if they can get away with it.
                Yes, but that POP is the initial load of the fund. If it's 3% and you invest 1000, only 970
                starts working right away.

                Anyway, I always use no load funds. Their fees are only applied if you sell out before a
                specified period of time.
                ChEAr$,
                Harlan Lunsford, EA n LA

                Comment

                  #9
                  Yes...But

                  I do understand that there are front-end fees, back-end fees, and portfolio fees, and that the fee expressed as a percentage is higher when there is only a meager amount of money involved. These are economics, and I believe everyone performing a service is entitled to be paid for that service.

                  However, this fund was disclosing its total performance over 1-yr, 5-yr, and 10-yr periods. It was not limited to the small investor putting in $1000, but instead the total spectrum of their invested billions.

                  Historically, the difference between the return on NAV and POP has been around 1.0%. For the year 2008, this difference is 3.2%. The fund is Putman Vista. If a fund has fixed administrative expenses, and the price of a share drops by 50%, then it is natural to expect the fee to double (if expressed as a per cent of price).

                  But 3.2% is unheard of. Vanguard advertises that their fees are less than 1.0%. An interested investor should run a math model of $1000/yr invested over 40 yrs. at 11%.
                  Then 10% to allow for a 1.0% fee, then 7.8% to allow for the 3.2% fee. Results are:

                  With no load, $588,268. With 1.0% fee, $446,707. With 3.2% fee, only $247,255.
                  Note that with a 3.2% fee, over the course of a 40-year career, the custodian makes more than the investor, and invests no money himself.

                  And the worst thing about it - the fees are hidden. Only "blue sky" type laws force the funds to disclose these things.

                  Comment

                    #10
                    Snags: Disclose? Surely you jest.

                    Forcing the Mutual Fund Industry to actually disclose meaningful information will put the majority of them out of business. Better to keep their customers in the dark so those fees will keep rolling in and the slick advertising budgets are funded to the max.
                    "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith

                    Comment

                      #11
                      Speaking of fees

                      when mutual funds first hit the big time back in the sixties, typical front end load was
                      7%.
                      ChEAr$,
                      Harlan Lunsford, EA n LA

                      Comment

                        #12
                        Another "fee" you will never see in mutual funds or in 401K's and the like, is the commission the institutional buyers/seller pays. Granted, it is probably not a full service broker commission, but unlikely a Scottrade buy or sell. We buy and sell in lots of 100 more or less and they buy and sell in 100k lots and that will definitely add to the "hidden fees." I doubt they consider these commissions "management or adminstrative fees." The comeback I received a few years ago from a broker was something like, its our fund so there is no commission. But, the trade still goes through a clearing house, even if they own it.

                        Comment

                          #13
                          He Told You Correctly...

                          Yes Slater, I found this out years ago when tracking the performance of a 401k that I had.

                          He told you correctly that "it is our fund" so there is no commission. The employee chooses a fund, Oppenheimer Floppenheimer, where he wishes for his 401k money to be invested. $2000 gets put into the custodian's account for investment.

                          What they don't tell you is that they put this money in their OWN fund, out of which only $1900 goes to Oppenheimer. The next year, they do the same thing with the next batch of $2000...so technically there is no fee because "it is our fund."

                          And of course, this is ON TOP of any fees charged by Oppenheimer.

                          With an arrangement where they can rape, pillage, and plunder the money, of course they would need no commission. So he told you correctly...

                          Comment

                            #14
                            Alright all your bashing of the Mutual Fund world and all those who live in it has finally convinced me , I'm out, no more mutual funds for me, sticking to the banks and cd's and savings accounts, because there fees are soooo transparent and they are sooo honest, These banks are the only ones I can trust, real salt of the earth types. Thanks for clearing this all up.

                            Wait, wait , wait aren't these the same people who brought us this mortgage mess, OK so maybe the banks aren't the answer. I guess I will have to find a good coffee can anybody here got any suggestions. And possibly a safe yard I could use for say 30 years.

                            Comment

                              #15
                              H-m-m. I'm not sure if I know of a good, safe back yard.
                              Let me ask John Bogle if he has any suggestions and I'll get back to you.
                              "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith

                              Comment

                              Previous 1 2 template Next

                              Disclaimer

                              Collapse

                              This message board allows participants to freely exchange ideas and opinions on areas concerning taxes. The comments posted are the opinions of participants and not that of Tax Materials, Inc. We make no claim as to the accuracy of the information and will not be held liable for any damages caused by using such information. Tax Materials, Inc. reserves the right to delete or modify inappropriate postings.

                              Working...
                              X