At the beginning of the year, the composition of the Blackrock mutual fund was as follows:
Stocks Number of Shares Price per share
Invested in
X 20 million $12
Y 30 million $31
Z 25 million $22
W 15 million $20
The fund has issued 100 million of its own shares to investors. The fund’s liabilities are the management fees paid to the portfolio manager ($1 million) and research costs ($10 million). What was the net asset value of the fund at the beginning of the year?
Today, the market prices of stocks X, Y, Z and W, are $15, $25, $25 and $18 respectively (Assume the number of shares of each stock owned by Blackrock remains unchanged, and that the fund liabilities remain unchanged as well). In addition, the fund just made a dividend distribution of $1 per share to investors. What is the new net asset value of the fund today? What is the rate of return of the fund between the beginning of the year and today?