Daily Fund Pricing: Understanding the Basics

Unit Prices and Calculations

The unit price represents how much each unit or "share" of a fund is worth. Assume the unit price of XYZ Fund is $10. Each unit you own of XYZ Fund is worth $10. To calculate the unit price, start with the value of the fund's assets, i.e., the stocks, bonds and other investments held by the fund. Then subtract any expenses of the fund. Finally, divide the net value by the number of units in the fund.

An example:

$1,010,000 (the value of XYZ Fund's assets)
- $10,000 (expenses of the fund)
_____________________________________________
$1,000,000 (net value of fund)
 
$1,000,000 ÷ 100,000 (total number of XYZ Fund's units)
= $10 (the unit price of XYZ Fund)

A Fund's Investments are its Assets

The assets of a fund include all the fund's holdings, such as stocks, bonds and cash, plus dividends and interest, and any gains or losses based on current market prices. The market value is based on the closing price each day the markets are open.

What Your Investments are Worth

The total value of your investment in any fund is calculated by multiplying the number of units (or shares) that you own by the unit price of the fund. For example:

100 (the number of units of XYZ Fund that you own)
x $10.00 (unit price of XYZ Fund)
= $1,000.00 (total value of your shares in XYZ Fund on any particular day)

What You Should Know About Fund Expenses

There are certain costs incurred for managing investment funds. There are three types of expenses:

1. Investment management fees—the fee that Wespath Benefits and Investments (Wespath) pays to the outside investment management firms responsible for making the investment decisions for the fund.
2. Custody fees—the fee that our custodian bank earns for holding assets and transferring them (buying/selling securities) as directed by Wespath and the outside investment management firms.
3. Administrative and operating expenses—the expenses that Wespath incurs for record keeping and other activities and operations.

Together, these fees comprise what is commonly known as a fund's operating expenses and are used to calculate the fund's "expense ratio."

Expenses—the Cost of Managing Your Money

Expenses are paid from a fund's assets. The expense ratio is the ratio of fund expenses to the fund’s assets. The higher the expense ratio, the lower the fund value. If XYZ Fund has an expense ratio of 0.50%, then 50 cents of every $100 you invest in the XYZ Fund, goes to pay the fund's expenses each year. The expense ratio for each of Wespath's funds is posted on the Wespath Benefits and Investments website.

Unit Prices—Assigned After the Close of Each Business Day

Fund unit values are determined daily after the close of financial markets in the U. S. Fund unit values are determined by accumulating the fair value of securities owned by the fund less expenses and dividing by the number of units outstanding for the Fund. The fund invests in a variety of asset classes and types of investments. Many of these investments trade on recognized securities markets and have readily ascertainable market values on a daily basis. Some of these investments, such as private equity funds, private real estate funds and other alternative investments are “illiquid” investments—they do not have readily ascertainable market values. For these investments, the fund generally depends on information received from the issuers of the investments. Many of these illiquid investments only provide the fund with values for the investments on a quarterly or less frequent basis. Therefore, when determining fund unit values, some of the pricing information used by the fund will be three or more months old. As a result, the fund unit value as of any particular day may not reflect the actual fair value of a fund unit on that day.

Because unit prices are not determined until after the markets close, the posted unit prices that appear on Wespath's website are the closing prices from the previous day and not the prices you will receive if you sell or purchase units of a fund during the current day. After 3:00 p.m., Central time, the value of all the assets held in a fund is totaled and the unit price is determined for orders placed that day. Therefore, if you sold or purchased units prior to 3:00 p.m., Central time, the unit price at which you bought or sold will be determined based on the change in the value of the stocks and bonds in the fund that day. Fund investors may not purchase or sell shares at the previous day's prices.

Funds Take an Occasional Holiday

Wespath's funds can be found on our website along with a list of Wespath and U.S. market holidays.

Unit prices are not calculated on U.S. market holidays or on Wespath holidays.

Unit prices are recalculated each night and posted the next business day by 8:00 a.m., Central time. Because Wespath's funds are not publicly traded, their prices can only be found on Wespath's website or through Benefits Access.

Updated on September 12, 2017.