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The explanations of NAV I see are that it is the value of the fund, less liabilities, divided by the number of shares. The fund's expenses come out of the fund's net assets.

Most funds have different classes, with different expense ratios. But all the classes come from the same pool of securities that make up the fund.

It seems like there must be something else going on here, as that appears contradictory. If different classes come from the same set of assets, then should't the NAV of each class be the same? But if the NAV was the same, then how could the higher expense ratio classes be charging higher expenses? Doesn't their NAV need to grow less than lower expense ratio funds?

  • Are the number of shares in each asset class the same? If not, you'll have different NAVs even though the assets are qualitatively the same. – Bob Baerker Mar 23 at 2:25
  • Different share classes of the same fund can have different NAVs (which are computed after the expenses have been subtracted off (this happens daily). For example, Vanguard Health Care Fund Investor Shares have a NAV of $204.85 today while the Admiral Shares on the same fund are priced at $86.39 (and yet the Admiral Shares have a lower expense ratio than the Investor Shares). – Dilip Sarwate Mar 23 at 2:34

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