Apart from First-In-First-Out (FIFO) method, investors can use the average cost method to determine the average price of mutual funds. Other methods include High-Cost-First-Out (HIFO) and Last-in-First-Out (LIFO).
The average cost method is the most common mutual fund price evaluation technique, but investors can opt for other methods. They should select their preferred method before the actual sale of fund units. Investor should consult with their financial planners and tax advisers and decide on mutual fund price evaluation method that minimizes mutual fund holdings in their accounts. The accountant takes into account sales loads and ongoing expenses, as they are the primary types of expenses incurred in mutual funds.