What is forward pricing for units trusts?
Forward pricing, which is the norm, entails basing prices on NAV (Net Asset value) calculated at the next valuation point. So someone buying units in a fund will buy on the basis of a price calculated after his or trade is placed. The disadvantage is that buyers do not know how many units they will get for their money, and sellers do not know how much money they will get for their units, until after the next valuation point. To an extent they are buying and selling ‘blind’. The managers like it, of course, because there is no risk of mispricing. In the case of a dual pricing scheme (bid/offer), the bid and offer prices are the selling and buying prices respectively. In the case of a single pricing scheme, the single price does not take into account subscription or realisation fees which may be separately payable by the client upon purchase or redemption respectively.
