{"templateId":"markdown","sharedDataIds":{"sidebar":"sidebar-sidebars.yaml"},"props":{"metadata":{"markdoc":{"tagList":[]},"type":"markdown"},"seo":{"title":"How mutual fund trading works","description":"Fondo is the ground breaking open finance platform that lets you focus on what matters","llmstxt":{"hide":false,"sections":[{"title":"Table of contents","includeFiles":["**/*"],"excludeFiles":[]}],"excludeFiles":[]}},"dynamicMarkdocComponents":[],"compilationErrors":[],"ast":{"$$mdtype":"Tag","name":"article","attributes":{},"children":[{"$$mdtype":"Tag","name":"Heading","attributes":{"level":1,"id":"how-mutual-fund-trading-works","__idx":0},"children":["How mutual fund trading works"]},{"$$mdtype":"Tag","name":"p","attributes":{},"children":["Mutual funds pool end-customers' money to buy a diversified portfolio of securities. Each trading day, the vast majority of funds calculate a ",{"$$mdtype":"Tag","name":"strong","attributes":{},"children":["Net Asset Value (NAV)"]}," by valuing its holdings and dividing by the number of outstanding units (certain mutual funds undertake this monthly, e.g. hedge funds). The ",{"$$mdtype":"Tag","name":"strong","attributes":{},"children":["unit price"]}," used for end-customer trades is based on this NAV, which means end-customers ",{"$$mdtype":"Tag","name":"strong","attributes":{},"children":["do not know the exact price"]}," when they place a subscription or redemption order. Orders received before the fund's daily cut-off are executed at the next NAV strike."]},{"$$mdtype":"Tag","name":"p","attributes":{},"children":["Funds are often issued in several ",{"$$mdtype":"Tag","name":"strong","attributes":{},"children":["share classes"]},". These may differ by ",{"$$mdtype":"Tag","name":"strong","attributes":{},"children":["currency"]},", allowing end-customers to hold units in their preferred denomination, or by ",{"$$mdtype":"Tag","name":"strong","attributes":{},"children":["target investor segment"]},", such as retail versus institutional. While share classes have separate prices and/or currencies, they represent proportional claims on the same underlying portfolio."]},{"$$mdtype":"Tag","name":"p","attributes":{},"children":["The mutual fund value chain brings together several specialized actors:"]},{"$$mdtype":"Tag","name":"ul","attributes":{},"children":[{"$$mdtype":"Tag","name":"li","attributes":{},"children":[{"$$mdtype":"Tag","name":"strong","attributes":{},"children":["The distributor"]}," offers end-customers various types of investment accounts and ensures that each investor's cash and fund units are correctly record-kept and compliant with regulatory requirements."]},{"$$mdtype":"Tag","name":"li","attributes":{},"children":[{"$$mdtype":"Tag","name":"strong","attributes":{},"children":["Executing party"]},", a marketplace that connects distributors to thousands of fund companies and handles cross-border order routing and settlement instructions."]},{"$$mdtype":"Tag","name":"li","attributes":{},"children":["The ",{"$$mdtype":"Tag","name":"strong","attributes":{},"children":["fund company"]}," calculate the NAV, accept or reject orders, and settle the issuance or redemption of fund units."]}]},{"$$mdtype":"Tag","name":"p","attributes":{},"children":["In this structure, the ",{"$$mdtype":"Tag","name":"strong","attributes":{},"children":["fund company keeps records only at the distributor level"]},", not at the level of each end-customer. The distributor's own custody and account system maintains the detailed, customer-by-customer ledger of unit holdings. This clear division of responsibility lets the fund companies focus on fund-wide share issuance and NAV calculations, while distributors provide granular client statements and positions."]}]},"headings":[{"value":"How mutual fund trading works","id":"how-mutual-fund-trading-works","depth":1}],"frontmatter":{"seo":{"title":"How mutual fund trading works"}},"lastModified":"2026-02-21T22:00:13.000Z","pagePropGetterError":{"message":"","name":""}},"slug":"/guides/fondo-wiki/mutual-fund-trading","userData":{"isAuthenticated":false,"teams":["anonymous"]},"isPublic":true}