A mutual fund currently manages $500 Million in assets and has issued 10 million shares. You invest $100,000 into the fund.
(a) What is the NAV, and how many shares will you receive?
(b) Suppose that over the next three years, the fund’s investments without considering fees return 10%, -10%, and 20%. In addition, the fund takes 1% at the start of each year for its management fee. What will have been your annualized return as an investor, and what will be the new NAV at the end of the period?