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Commentary

Funds Take Japanese Stock's Trading Halt in Stride

Figuring NAV when a fund's top holding stops trading is a judgment call.

When a system is working smoothly, most people don't even realize it exists. The way mutual funds calculate NAVs fits that description. Investors expect to see a fund's NAV and year-to-date return every morning in the newspaper, and for the most part, they do.

However, mutual funds that own Hikari Tsushin, the Japanese mobile-phone and Internet company, have faced an unusual dilemma recently: How should they determine their daily net asset values (NAVs) when one of their prominent holdings has no official closing price? The answer to that question inspires confidence, because on this issue at least, mutual-fund boards of directors and the Securities and Exchange Commission are on the ball.