Ch.7 · NAV Calculation Rules · hard
What is 'NAV protection' through swing pricing and how does it work?
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EXPLANATION
Swing pricing adjusts NAV for large net flows: on a day with large net outflows, the NAV is swung down (by the swing factor) for all transactions. Redeeming investors get a slightly lower NAV, which covers the transaction costs of liquidating positions to meet redemptions. Remaining investors are protected from bearing these costs. SEBI has introduced swing pricing for open-ended debt schemes to improve fairness.
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