I am not clear on why VTSMX has a lower share price than VFINX (higher), if they perform basically the same. Which is better: for instance, $2,000 of VTSMX or $2,000 VFINX?The question, relative to an "open end" mutal fund, is kind of like asking "Which is better, $2000 worth of $20.00 dollar bills or $2000 worth of $100 dollar bills. Both of the above funds are "open end" mutual funds. That means that the firm continually creates new shares on demand. In a "no load" fund like the ones above, shareholders buy the shares at "net asset value" and can redeem them at anytime at the prevailing market price or "net asset value". Sometimes people tend to confuse the way common stocks value is determined with the way the NAV of a mutual fund is determined. The value of common stock is determined by trading on and exchange. The NAV (net asset value) of an "open end" mutual fund is calculated by most funds after the close of the exchanges each day by adding up the market value of all the securities owned plus all other assets suchas cash, subtracting all liabilities and expenses. They then divide this result (total net assets) by the number of shares outstanding. The number of shares outstanding can vary each day depending on the number of purchases and redemptions. The market value of each share of stock owned by the fund affects the price of each share when its value goes up or down. In other words if Bill Gates came along and put another billion dollars into either of the funds above and the value of the stocks and bonds stayed exactly the same at the end of the next days trading, their would be no difference in the share value of either fund at the end of that trading day. There would be more shares outstanding and of course an extra billion of cash.I hope that I made myself clear.cf
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