Mutual Fund Public Offering Price

While the net asset value (NAV) of a mutual fund lists the current value of the fund's shares, the investor pays the public offering price (POP), which may contain a sales charge, to buy shares.

Sales load, revisited

A load is the sales charge you are assessed when you buy or sell shares in a mutual fund. The load compensates the broker or sales personnel who sold you the shares. The sales charge is always expressed as a percentage of the public offering price, or POP.

The load does not affect the net asset value. However, when you buy shares in a fund, you pay the net asset value plus the load, if any. The resulting figure is the public offering price. Conversely, if you know the public offering price and the net asset value of a fund, you can subtract the NAV from the POP to determine the load.

Load ranges

Sales charges range from zero to 8.5 percent of the POP. If you know the sales charge on a fund in which you wish to invest, multiply it by the public offering price and subtract that product from the POP to find the NAV. For example, suppose there is a 5 percent sales charge on a fund with a POP of $10. Take 5 percent of $10 (50 cents) and subtract it from the $10. Your net asset value will be $9.50.

True no-load funds have a 0 percent sales charge—there is no load added. For them, the public offering price is equal to the net asset value. No-load funds deduct their sales and distribution expenses directly from the fund.