How Informative Is Floating NAV When Securities Trade Infrequently?

Kyle D. Allen, George D. Cashman, Drew B. Winters

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

We examine if a floating net asset value (NAV) increases the transparency of risk for investors. Using closed-income fixed income funds we find little evidence that a floating NAV helps investors better understand the value and risk of a fund when a fund's assets trade infrequently. This potentially informs the debate regarding the adoption of a floating NAV in the money market industry. Our results suggest that it is unlikely that the benefits of floating NAV will outweigh the costs.

Original languageEnglish
Pages (from-to)69-82
Number of pages14
JournalFinancial Review
Volume51
Issue number1
DOIs
StatePublished - Feb 1 2016

Keywords

  • Closed-end funds
  • Fixed income funds
  • Floating NAV
  • Money market funds

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