When buying or selling units in an open-ended fund, an investor will not always know the price they will receive. This is due to the mechanism of forward-pricing.

Funds are generally priced once per-day at mid-day. Therefore, when a dealing instruction is placed on a fund by an investor, the exact price that they will receive will not be known until mid-day next day or the next valuation point of the fund.

For example, an investor may place a dealing instruction on a fund at 11am on Monday, but the actual price will only be secured at mid-day. Similarly, if a dealing instruction was placed at 3pm on Monday, then an investor will receive the price of the fund at mid-day on Tuesday. In either example, it is not possible to understand the exact price that will be received prior to the trade. However, funds are typically less volatile than shares due to the amount of holdings they contain.

One of the main reasons for forward pricing is to avoid a scenario in which open-ended funds are traded frequently on a short-term basis and thus producing excessive administrative requirements on fund managers.