What is Forward Pricing in mutual funds?

• A. It is the valuation process where an order to purchase or redeem is executed at the price determined by the portfolio valuation calculated after the order is received; before 4 PM NAV is end of day; after 4 PM NAV is end of next business day.
• B. It means orders execute at the next trading day price regardless of time.
• C. It locks in price at the previous day's NAV.
• D. It uses a random price daily.

Answer: (A)

Forward pricing is the method mutual funds use to set the purchase or redemption price based on the fund’s net asset value (NAV) calculated after the order is received, with a daily cutoff. If you place the order before the cutoff (typically 4:00 PM), it is priced at that day’s NAV. If you place it after the cutoff, the price used is the next business day’s NAV. This ensures all orders within a day are priced fairly using the same NAV calculation. Other choices don’t fit because they imply pricing that ignores the cutoff, uses a previous day’s NAV, or assigns a random price.