XYZ Mutual Fund launched a Close-Ended Scheme 'Dhan Surakasha' by issuing 10 crore unit of ₹10 each with a maturity period of 3 years. The fund initially invested 75% of its corpus in Debt Securities and balance in Equit

CS Professional · Capital Commodity and Money Market · PYQS · June 2019
XYZ Mutual Fund launched a Close-Ended Scheme 'Dhan Surakasha' by issuing 10 crore unit of ₹10 each with a maturity period of 3 years. The fund initially invested 75% of its corpus in Debt Securities and balance in Equities. However depending upon the market conditions shifting between Debt Securities and Equities were allowed. During the duration of Fund, While Debt portion (75% of initial corpus) yielded a return of 30%, the Equity portion realised a yield of 40% during the same period. During the tenure of Fund, a sum of ₹2 crore has been spent on various related expenses such as commission, administration fees etc. and a sum of ₹50 lakh was still outstanding at the time of redemption of the Scheme. In light of above information answer the following questions: What is the Net Asset Value (NAV) per unit of the Scheme ?

Answer & Explanation:

Computation of Net Asset Value (NAV) per unit of 'Dhan Surakasha' Scheme: 1. Initial Corpus Calculation: Number of units issued = 10 crore units Issue price per unit = ₹10 Total Initial Corpus = 10 crore units * ₹10/unit = ₹100 crore 2. Initial Investment Allocation: Investment in Debt Securities = 75% of ₹100 crore = ₹75 crore Investment in Equities = 25% of ₹100 crore = ₹25 crore 3. Value of Investments at Redemption: Debt Securities: Initial Investment = ₹75 crore Yield = 30% Closing Value of Debt Securities = ₹75 crore * (1 + 0.30) = ₹75 crore * 1.30 = ₹97.50 crore Equities: Initial Investment = ₹25 crore Yield = 40% Closing Value of Equities = ₹25 crore * (1 + 0.40) = ₹25 crore * 1.40 = ₹35.00 crore 4. Total Closing Value of Investments: Total Closing Value = Closing Value of Debt Securities + Closing Value of Equities Total Closing Value = ₹97.50 crore + ₹35.00 crore = ₹132.50 crore 5. Deduct Expenses: Commission, administration fees etc. spent = ₹2 crore Outstanding Expenses at redemption = ₹50 lakh = ₹0.50 crore Total Expenses = ₹2 crore + ₹0.50 crore = ₹2.50 crore 6. Calculate Net Asset Value (NAV) of the Scheme: NAV of Scheme = Total Closing Value of Investments - Total Expenses NAV of Scheme = ₹132.50 crore - ₹2.50 crore = ₹130.00 crore 7. Calculate NAV per Unit: Number of Units = 10 crore units NAV per Unit = NAV of Scheme / Number of Units NAV per Unit = ₹130.00 crore / 10 crore units = ₹13.00 per unit Therefore, the Net Asset Value (NAV) per unit of the Scheme is ₹13.00 .

Topics: Capital Market

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