How Informative Is Floating NAV When Securities Trade Infrequently?. Issue 1 (February 2016)

• Record Type: Journal Article
• Authors: Allen, Kyle D.; Cashman, George D.; Winters, Drew B.
• Is Part Of: Financial review. Volume 51:Issue 1(2016)
• Page Start: 69
• Page End: 82
• Publication Date: 2016-02
• Subjects: floating NAV -- fixed income funds -- money market funds -- closed‐end funds -- G10 -- G18; Finance -- United States -- Periodicals; Finance -- Periodicals; 332
• DOI: 10.1111/fire.12094
• Languages: English
• ISSNs: 0732-8516

Abstract

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.