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

Xetra

A trading venue operated by the Frankfurt Stock Exchange.

Costs and Charges

The money you pay when investing.

Bull market

We explain what a 'bull market' means

Wall Street

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

Packaged Retail and Insurance-based Investment Product (PRIIP)

An investment where, regardless of its legal form, the amount repayable to the retail investor is subject to fluctuations.

Yield curve

A graphical representation of interest rates over time

Key Information Document (KID)

A document issued by an investment fund to help investors determine if it's the right fund for them.

Securities

Bonds and stocks.

Global Investment Performance Standards (GIPS)

A set of standards which investors use to present their investment results.

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).

Forward Pricing