Historic Pricing

1979 Energy Crisis

What is the historical price

Historical pricing is a unit pricing method used to calculate the value of an asset using the last calculated valuation point. Historical pricing is used when the value of an asset is not updated in real time.


Historical pricing illustrates the importance of understanding when assets have their calculated values, whether at a certain time or at various times during the trading day or in real time. This is called the evaluation point. If an investor is trading at the exact moment when the net asset value is calculated, he need not take time differences into account as part of his investment strategy. However, if an investor trades before or after determining the net asset value, he will use an old calculation. This means that there may be a risk that the assessment is inaccurate.

Mutual funds generally update their net asset value at the end of the trading day. Fund managers have two options: they can view the last calculated net asset value, also known as a historical valuation point, or they can note the net asset value of the next valuation point.

An investor looking to buy a fund on the basis of a historical price knows how many shares can be bought for a certain amount of money because the valuation point is known. In turn, sellers know exactly how much money they can get for a specific number of stocks. The buyer’s risk is that the fund’s net asset value will decrease at the next valuation point, which means that the buyer will have spent more on a particular number of shares. The risk for the seller is that the value of the shares will increase at the next valuation point, which means that the seller does not earn as much money for a given number of shares.

Forward price vs historical price

The forward price is the most widely used method of calculating the net asset value. Forward pricing involves the processing of orders to buy and sell open-end UCI shares at net asset value at the next market close. In particular, open-ended mutual funds reassess their assets at the end of the trading day. Buyers are at a disadvantage because they do not know how many fund shares can be purchased. This pricing mechanism ensures that stocks are bought and sold at a price that reflects changes in the fund since the last valuation.

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