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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

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Unit Trusts

A collective investment scheme the investors pay money into in exchange for units. The money is invested in a diversified portfolio of assets.

Key Information Document (KID)

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

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.

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Running yield

The annual interest payment (dividend) divided by the current market price of a bond.

OEIC

Unique to the UK, these funds pool together money to invest from multiple investors.

Quantitative easing

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Yield

Income from an investment as a percentage of its current price.

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