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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

Yield

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

Equity ETF

An exchange-traded fund that is comprised of a set of stocks.

Net Income (NI)

The money a firm is left with from sales after subtracting taxes and different business costs.

Compound interest

Understand what compound interest means and how it's calculated

Inflation

The increase in the prices of goods and services over time, and the process by which money loses its value.

Bond

Learn what a bond is

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.

Wall Street

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

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