/

Forward pricing

Forward Pricing

Mutual funds are traded on a forward pricing basis, meaning the price you see will be different to the price you may trade at.

Mutual funds are traded on a forward pricing basis, meaning the price you see will be different to the price you may trade at.

This is because funds are priced once per day, manually by the fund manager. So the price of the fund won’t be known until after all the instructions to buy and sell have been collected, sent to the fund manager, and processed the next day.

Forward pricing is based on the fund’s net asset valuation (NAV).

The buy and sell prices of mutual funds are generally not the same. Mutual funds use a dual pricing system where the buy price is typically higher than the sell price, reflecting the costs associated with creating or canceling fund units.

More terms

Retail Prices Index (RPI)

An index published each month by the Office for National Statistics, which measures the level of retail prices in the UK. Cash flows on all index-linked gilts are linked to the RPI.

Leverage

A method of trading using borrowed money that usually involves a very high level of risk.

Time Value of Money

The concept that money you have now is more valuable than the same sum in the future.

Stock Exchange

A physical/digital place where stockbrokers and traders can buy and sell securities.

W-8BEN Form

Non-US individuals and businesses may have to file this form for the Internal Revenue Service (IRS), the US tax authority.

Clean price

The quoted price of a gilt, which excludes accrued interest

Accrued interest

The interest earned on a gilt since the last dividend date. When buying a gilt, the buyer pays the accrued interest at the time of a transaction to the seller in addition to the clean price of the gilt

NASDAQ

A US stock exchange specialising in the shares of technology companies.

Wall Street

A street in New York that became a figure of speech for the financial markets of the US.

You’re just minutes away from commission-free investing

When you invest, your capital is at risk

Freetrade does not provide investment advice and individual investors should make their own decisions or seek professional advice. The value of investments can go down as well as up and you may receive back less than your original investment. Freetrade is a trading name of Freetrade Limited, which is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales (no. 09797821).

© 2025 Freetrade, All rights reserved. The Apple logo is a trademark of Apple Inc. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.