As I understand it, most US-based funds would calculate their end-of-day NAV after New York has closed. For a fund containing only US-traded holdings, that calculation seems fairly straight-forward. But what about a globally diversified fund, that might have holdings not traded on US times? Would the fund company decide on a specific time and check the current value of all holdings, even if those values are mid-day somewhere else?

I'm basically trying to understand how arbitrary NAV calculations are. If there is a rule of thumb inside a firm that say "we calculate NAV for Global Fund B at some point between 17:00 and 17:30 EST" then there would be no way for an outside party to do the same calculation and arrive at the same result even if they know the full portfolio, that is without knowing exactly when the firm's numbers were run.

  • You seem to assume that trading is ongoing when the NYSE closes at 2100 UTC, but that’s actually not the case. Europe is already closed for the night by then, and Asia is still in the very early morning; Tokyo opens at 0000 UTC, New Zealand is the earliest at 2200 UTC. en.wikipedia.org/wiki/List_of_stock_exchange_trading_hours – chirlu Aug 18 '18 at 17:45

You are correct that differences in trading hours are a consideration in pricing mutual funds. Another example would is holidays in a foreign country which are not holidays in the US. In this case, there is an entire day of difference in the pricing.

Mutual funds have recognized that some people will try to make a profit from these timing differences. To prevent this, many limit frequent trading.

I recommend reading the prospectus for a fund you are considering for more information. As an example, this Vanguard prospectus discusses policies to prevent time-zone arbitrage as well as the NAV calculation process. (Pages 17-18 and 23-24 respectively of the PDF).

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