When buying funds, many friends will see that the fund has unit net worth and accumulated net worth, and then they must choose funds based on this indicator. In fact, there is a difference between accumulated net value and unit net value. This article will give you a detailed introduction to the difference between accumulated net value and unit net value, and why the accumulated net value is lower than the unit net value.

The difference between cumulative net worth and unit net worth

The unit net value of a fund refers to the net value of each fund unit, which is equal to the balance of the fund’s total assets minus the total liabilities and then divided by the total number of fund units. Simply put, the unit net value is the value of each fund and also the transaction price of the fund.

The cumulative net value of the fund is based on the net value of the unit plus the cumulative dividends and splits since the fund was established. Therefore, once the fund distributes dividends or splits, the cumulative net value will be greater than the unit net value. The accumulated net value is the data that reflects the overall income of the fund since its establishment, and the accumulated net value of the fund should be referred to when evaluating the fund’s performance.

Generally speaking, the more the difference between the unit net value and the accumulated net value, the greater the amount of dividends paid by the fund. However, the number or amount of fund dividends is not a criterion for judging the performance of the fund. The following are the specific differences:

  1. The definition is different: the net value of the fund unit is the value of each unit of the fund on the day, and the cumulative net value refers to the cumulative income of the fund since the establishment of the fund.
  2. Reflect different: unit net value reflects the rights and interests of fund holders at a certain point in time, and cumulative net value reflects the historical performance of the fund during its operation.
  3. The calculation is different:

Unit net value = (total fund assets-fund liabilities) / total fund shares.

Cumulative net value = fund unit net value + cumulative unit dividend amount in the history of the fund (the total amount of all dividends in the history of the fund / total fund shares).

What is the reason why the accumulated net value is lower than the unit net value?

The calculation formula of unit net value is: unit net value = (total assets-total liabilities)/total fund shares, which reflects the current value of the fund and the expected return of the unit; the formula for calculating the cumulative net value is: cumulative net value of the fund = net unit value + since the foundation of the fund The sum of accumulated dividends reflects the data on all expected returns of the fund since its establishment.

Usually the unit net value of a fund is lower than its accumulated net value, but there are some special circumstances that cause the unit net value to be higher than the accumulated unit net value.

  1. The accumulated net value resulting from the conversion of on-site ETF products is lower than the unit net value. For example, the Southern China Securities 500ETF implemented share conversion on April 14, 2015, and each fund share was converted to 0.28032483, resulting in a cumulative net value far lower than the unit net value.
  2. Closed-end funds or open-end funds have transformed, and the poor performance after transformation has resulted in accumulated net worth lower than unit net worth.

Now everyone should know the difference between accumulated net worth and unit net worth. You can learn more before buying funds. Only when you have enough knowledge and understanding of the fund can you take advantage of the actual investment opportunities, so that the returns will naturally be more stable.