How Informative Is Floating NAV When Securities Trade Infrequently?

Published date01 February 2016
Date01 February 2016
The Financial Review 51 (2016) 69–82
How Informative Is Floating NAV When
Securities Trade Infrequently?
Kyle D. Allen
TexasTech University
George D. Cashman
Marquette University
Drew B. Winters
TexasTech University
We examine if a floating net asset value (NAV) increases the transparency of risk for
investors. Using closed-income fixedincome funds we find little evidence that a floating NAV
helps investors better understand the value and risk of a fund when a fund’s assets trade
infrequently. This potentially informs the debate regarding the adoption of a floating NAV in
the money market industry. Our results suggest that it is unlikely that the benefits of floating
NAV will outweigh the costs.
Keywords: floating NAV, fixed income funds, money market funds, closed-end funds
JEL Classifications: G10, G18
Corresponding author: Texas Tech University, Rawls College of Business, Lubbock, TX 79409-2101;
Phone: (806) 834-3350; Fax: (806) 742-3197; E-mail:
C2016 The Eastern Finance Association 69

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT