What is 'forward pricing'? Definition & meaning

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

index-linked gilts

Gilts where the dividends and principal repayments are related to movements in the Retail Prices Index (RPI). This is as opposed to a conventional gilt, where the dividends and principal repayments are fixed in nominal terms.

Technical Analysis

Examining price movements of shares and other assets, and trying to predict how they will move in the future.

Leverage

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

Limit order

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Formal admission

The moment new shares are officially admitted to the stock exchange and open to trading for everyone.

Stock Exchange

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

Income statement

A summary of a company's income and expenses over a set period of time.

Float

Listing a company on a stock exchange, or the shares that are genuinely up for grabs once it’s there.

Collective investment scheme

Learn what's a collective investment scheme

Forward Pricing