Working on Data and the Constant NAV

Updated: Apr 13, 2019

We have no access to data to be able to say clearly if funds used to compute the NAV of a Constant NAV Fund as per market valuation principles, pre-MMFR.


The Money Market Fund Regulation makes it mandatory for a fund to publish the difference between the market valuation based NAV and the Constant NAV a Daily Basis in a public section of the Fund’s website.


To be really clear, while we tend to loosely use the expression market-valuation based NAV, the regulation makes a clear distinction between Mark to Market based methods and Mark to Model methods of valuation. For comparison with the Constant NAV the outcome of both methods are treated on the same footing.


There are many advantages of a Constant NAV fund. Investors and the Fund can transact without caring to look at the actual NAV. Increase in values are handled separately and immediately paid out. This makes it possible for investors to “write cheques/ checks” on their Money Market Fund account. (This should be understood more generally as the ability to issue payment instructions to Fund.)


Constant NAV mechanics and the resultant advantages can be viewed in this video.


And then Constant NAV funds have the added advantage of being simple to account. That simplicity remains – purchases and sales do not require constant references to the impact of valuation at the time of investment and redemption; or of loads etc.


However, the task of not having to calculate market valuation-based NAVs is not one of the advantages.


Like we noted, the difference between the calculated and constant NAV needs publishing!

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