Skip to main content

Understanding NAVPU Better

As an investor, I tend to be rather impulsive. So, I decided to do more studying about the NAVPU. NAVPU means Net Asset Value Per Unit. So, how do we get the NAVPU? My first understanding of NAVPU is the amount per unit to make up one unit. For example, if the NAVPU is at least PHP 100.00 per unit then spending PHP 1,000.00 will give me 10 units of that certain Unit Investment Trust Fund (UITF). However, how do we fully understand the NAVPU?

As a Metrobank client, I decided to look into Metrobank to further understand what NAVPU means than just the amount of units I can get depending on the price per unit. Here's what Metrobank says about how to understand NAVPU when investing:

Understanding the Net Asset Value per Unit

Net Asset Value per Unit, or NAVPU, on the other hand, is the underlying value of each unit. NAVPU is important because it allows you to compare how different schemes are trading, even though they may have very different prices. A large difference between price and NAVPU suggests that the market believes that either some better pricing is available, or that the NAV is overstated.

Investing in a Unit Investment Trust Fund (UITF) means you are buying units of participation. The amount of units you get depends on how much money you invest. How much each unit is worth will depend on the Net Asset Value Per Unit (NAVPU) which is the current market value of each unit of participation in the fund.

NAVPU Computation Method

NAVPU (net asset value per unit) is the total market value of the investment fund minus expenses and liabilities, divided by total number of units of participation.

How to understand and interpret NAVPU

To determine the value of your UITF investment, simply multiply the net asset value per unit (NAVPU) by the number of units of participation acquired. The value of the NAVPU changes daily depending on current market conditions

NAVPU will be different for various funds because the value of their investments will be different.
These expenses will include management fees. As the Bank of the Philippine Islands would like to illustrate the formula as follows with these images owned by them:

BPI

Trying to take a look at the value of all securities (Total Asset Value) less the expenses which include the management fees, taxes, and every other expenses. In short, it's very similar to a stock market where there are buying fees and selling fees. The NAVPU would mean that there's some deduction done in the process such as the annual management fee. If my AXA Chinese Tycoon Fund management fee is 2.5% per year then I'm charged 0.2083% per month whenever I pay the PHP 3,000.02 monthly charge. That means I'm paying PHP 6.25 per month for every time I pay the monthly fees. Meanwhile, if I get the Philippine Stock Equity Index Fund's 1.5% management fee then I'm paying PHP 1.25 as a management fee per PHP 1,000.00. This of course is not yet the NAVPU since the taxes and other expenses aren't accounted for yet. NAVPU would mean all expenses have been paid for. 

In accounting, your net profits are profits that are done after paying all expenses. A company pays its managers (management fees), workers (otherwise said workers have every right and duty to quit a company that doesn't pay them properly), and other expenses (such as electricity, water, and phone bills) then there are still taxes. Deduct all revenues minus all expenses and that becomes the net profit after taxes. The net profit after taxes goes to the capital which must subject itself (again) to be used for future expenses. The capital provides the equipment, materials, salary for all kinds of workers (hence they become partakers of the fruit of the labor), and the money for all accounts payable. 

So, the NAVPU is basically the profit per unit when the management fees, taxes, and every other expenses (such as buy and sell fees) are accounted for. So, the best way to buy in bulk is to wait for the NAVPU to be in dip. Meanwhile, the NAVPU may not always be at a dip so setting a minimum amount (such as PHP 1,000.00 to PHP 2,000.00 for beginners) per month would be beneficial. I would invest every month even when the market is high (buy high, sell higher) and then buy more than usual when the market is low (buy low, sell higher). A combination of both for a certain span (I intend to use the money later) would probably give me the best yields overall. So, during the span of five years ore more--my focus is to invest more during a bear more or invest less during a bull market. 

References

Websites

"Investment Academy: NAVPU and NAVPS" 

"Net Asset Value per Unit (NAVPU)"
Labels:

Popular posts from this blog

#SahodItaasPresyoIbaba Economics' Understanding of How Gasoline Prices Work

International State College of the Philippines Today is Flor Contempacion Day , and rallies are expected. However, whether it's Flor's death anniversary or not, rallies are expected for the wrongest of reasons. I would like to address this photo from the International State College of the Philippines' Facebook page. The demands here are rather clunky and stupid. We have the following demands that would naturally clash with each other, such as: No to the oil deregulation law while demanding lower oil prices. This is simply ignoring the basic fundamentals of economics, namely the law of supply and demand . They say that oil companies are greedy for gain. These rallyists probably don't really understand the difference between revenues and profits . Let's understand the Oil Deregulation Law  The Oil Deregulation Law, or the Republic Act No. 8479 , passed on February 10, 1998, under the late Fidel Valdez Ramos. Here's how the liberalization works: CHAPTER II  LIBERAL...
Read more

"Will #SahodItaasPresyoIbaba Economics Lower Philippine Gas Prices?

Inquirer Gasoline prices have increased again, haven't they?  A few days ago, I wrote  why #SahodItaasPresyoIbaba's view of gas prices is questionable . Today, I feel like writing this after several complaints on Facebook. I would like to create a follow-up post. People are complaining too much without understanding the real reason why some countries have lower prices of gasoline. Real talk. We need to talk about economic policies,  and  of course, please do a study on supply-demand analysis  on supply chain management . Let's examine the complaints made by Bulatlat Bulatlat Here's a chart from Bulatlat that compares the increase in prices of gasoline between the Philippines, Thailand, and Malaysia. It's always problematic when people ignore simple economics. It's funny, but Bulatlat mentions this on their website: Note also how expensive our diesel and gasoline products are compared to those of our ASEAN neighbors. The estimated common price today of diesel in...
Read more

The Good Old Days when Gasoline was Cheaper Under the Late Noynoy Aquino

Millennials' Voice I would like to clarify first and foremost that this post isn't an attempt to say that the late Benigno Simeon C. Aquino III's legacy was all bad. Some good things happened. However, let me be clear that it's stupid to say, " We don't need economic cha-cha because of the late Noynoy. " However, let me clear that I decided to write this because of a Facebook post called Millennials' Voice , which wrote this: Did you know that during President Noynoy Aquino's time, the price of oil in the world market was high, between $100 and $110 per barrel. But even with those high prices, gasoline and diesel at local pumps in the country were still relatively affordable.  Under President Duterte, world oil prices went up and down, from a low of $41 to a high of $101 per barrel. The big jump to $101 in 2022 happened because of the war between Russia and Ukraine.   Now, under the current president, world oil prices have gone up again to around $...
Read more

The Tragic Windfall of the Late Flor Contemplacion's Family

PEH.ph Last year, I wrote an article talking about Flor Contemplacion crybabies spreading fake news for 30 years . I noticed that the movie could be watched for free on YouTube (which is one hour and 52 minutes long), and the one that you had to pay for via rent or personal soft copy ( which is two hours and two minutes long). I was looking into the film and realized the "for free" version lacks the exaggerated water dunking and electrocution torture scene, which I believe is available, which is a ten-minute difference. I remember seeing the old version where Flor was tortured by Singaporean police via water dunking and electrocution, to get an answer out of her. The famous line by the late Nora Aunor was, "I did not kill anybody!" It's 31 years, and I don't expect the fake news about Flor to stop just because  it's past 30. No, fake news is that hard to kill even in the digital age. It reminds me of the fate of Flor's sons , where one of them, Sandr...
Read more

Has Passing Down Hatred for Singapore (Because of Flor Contemplacion) Economically Helped the Philippines?

PEH.ph It was on March 17, 1995, when Flor Contemplacion was executed in Singapore. I've noticed that I've been addressing her as the late many times, even if the late is a statement that may be ony appropriate if the person has been recently deceased within 10 years. It's about to become 30 years since Flor was hanged in Singapore. However, generational hatred would've been passed down from 1995 up to 2025. Some people are still tagging #JusticeFor Flor. These traits may be passed down from the Batang 1990s to their children in this generation. It may also be passed down from parent to child, even if the child was born in the 2000s to 2010s. Somebody born in 2000s and beyond might even say, "Papa and mama told me about Flor Contemplacion! That's why I hate Singapore!" Talk about a child born in 2004 who's probably angry with Singapore, because his parents kept telling him about how Flor was supposedly "unjustly treated" over there.  Some tim...
Read more