In chapter 10, we discuss how investment trust share prices might be discounted from NAV because of management expenses, marketability, etc. There also seem to be similar factors at play for unit prices of unit trusts. Yet, in the summary, we state that the unit price is equal to the NAV. Why is this the case?
For unit trusts the expenses are primarily taken explicitly, for example through the bid/offer spread, rather than implicitly and therefore investors are not concerned about a reduction in return due to implicit expenses (so the net asset value unaffected). A unit trust is open ended, ie can create and cancel units and therefore many unit trusts guarantee marketability of the units. Because investors do not need to worry about marketability the net asset value is unaffected. Hope this helps.
