The assets per share of a fund is found by dividing the fund’s total assets by the number of shares it has issued.  The total value of a fund’s assets is the market value of all the securities it holds along with its cash in hands and other holdings.  If some of a fund’s assets are not tradable, their value is estimated.

For example:  If a fund’s assets come to a value of 150 million dollars, and the fund has issued 50 million shares, then the firm has an assets per share ratio of three dollars.

Share Price of an Ordinary Mutual Fund (not tradable)

For an ordinary fund, the share price is derived from the assets per share.

• When you buy, or in other words, create, a share of a mutual fund, the price is equal to the assets per share plus entrance fees.
• Selling, or redeeming, a share of a fund is done at the assets per share less exit fees.

From this point on we will ignore the fees when calculating prices, since the entrance and exit fees on ETFs are negligible.

Assets per Share for a Index Linked ETF

To make trading simpler, most ETFs are defined so that their assets per share are linked directly to their target index.

Examples:

• The asset value of a share of Spiders is one dollar times one tenth of the S&P 500.  When the S&P 500 is at 1,200 points, a share of Spiders asset value is 120 dollars.
• If the S&P 500 rises by 300 points and reaches 1,500, the asset value of a Spiders share will rise 30 dollars to $150.  Investors, who bought shares of the fund when it was established, paid one dollar, times one tenth of the S&P 500 on that date.
• Diamonds is valued differently.  It is equal to one dollar, times one hundredth, of the DJIA.  When the DJIA is equal to 9,000 points, the assets per share of Diamonds is 90 dollars.