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Question about NAV and Leverage

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  1. #1

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    Question about NAV and Leverage

    Some ETFs like PTY have high leverage, according to seekingalpha 74.19% of leverage. They also trade at a 26.45% higher price than NAV. I wonder if the calculation of the NAV takes into consideration the high leverage they have? I.e. the higher price that you pay compared to the NAV is due to the leverage?

    https://seekingalpha.com/symbol/PTY/holdings

    https://www.morningstar.com/cefs/xnys/pty/quote


  2. #2

    NAV is "net asset value" - the value of the fund's assets less the value of the fund's liabilities. The amount of leverage is already taken into account in determining the NAV so the answer to you question is "no."

    However the use of leverage in a fund will mean that gains or losses in the value of the fund's assets are magnified when translated into changes in the NAV.

    DellthinkHK, si0001 and john_1122 like this.

  3. #3

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    Quote Originally Posted by traineeinvestor:
    NAV is "net asset value" - the value of the fund's assets less the value of the fund's liabilities. The amount of leverage is already taken into account in determining the NAV so the answer to you question is "no."

    However the use of leverage in a fund will mean that gains or losses in the value of the fund's assets are magnified when translated into changes in the NAV.
    Thank you!

  4. #4

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    Original Post Deleted
    I know what leverage and NAV are. Thank you for the link!
    Last edited by john_1122; 22-02-2021 at 11:09 PM.

  5. #5

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    Pimco trades at a premium in most cases and most of the time. Look at 5-10 year premiun/discount histories. One of those weird CEF things...

    Then there are similarish funds which always trade at a discount year in and year out.