Question

Last year at this time, a mutual fund had an NAV of $26.40 per share. Over the past year the fund paid dividends of $1.40 per share and had a capital gains distribution of $1.20 per share. What is the holding period return assuming that the current NAV is $28.84?

Answer 1

19.09%

Step-by-step explanation:

Given data:

Initial NAV per share = $ 26.40

Fund paid dividends per share = $ 1.40

Capital gains per share = $ 1.20

Current NAV = $ 28.84

Now,

The total income = Fund paid dividends + Capital gains = $ 1.40 + $ 1.20

or

The total income = $ 2.60

Now, the holding period return is calculated as:

holding period return =
`\frac{\textup{Total income + ( current NAV - initial NAV )}}{\textup{Initial NAV )}}`

or

holding period return =
`(2.60 + (28.84 - 26.40))/(26.40)*100%`

or

holding period return = 0.1909 × 100% = 19.09%