Why does the value of a bond mutual fund’s shares fluctuate?
Like all mutual funds, a bond mutual fund must recognize changes in the prices of all the securities held in its portfolio by calculating their market values, usually daily. Day-to-day changes in the value of the fund’s portfolio securities are reflected in the net asset value (NAV) of fund shares. To calculate the total return of a bond mutual fund, one must include any change in the fund’s share price or NAV, along with any income earned through dividends and capital gain distributions.
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