Accumulation and Income Units Explained

Understanding the difference between accumulation and in income units when buying a fund are important. You will normally be presented with the option to buy either an accumulation or income version of the fund.

There is no difference to the fund itself, but there is a difference in how the dividends (or interest) is distributed back to you from the fund’s performance.

Income units if you want to take the income, accumulation to reinvest for growth

If you opt for income units you are asking for the dividends or interest from your fund to be paid back to you as cash.

If you opt for accumulation units, you are asking for the dividends or interest from your investment to be distributed back into the fund increase your holding.

Should you be on the hunt for capital growth then accumulation units are usually the preferred choice. Because if the fund performs well, you will see compounded growth – i.e. your greater stake means you will have greater reward.

Although, if you are looking for a form of income too from your investment, then income units will be the way to go – although you may miss out on some capital growth.

<< Learn How to Invest in Funds From A-Z

Let's Talk

Buying Tremor SharesYou should have trusted your instinct- easy to say now I suppose. … Read More
Omega very bullishBullish? Looks sheepish now! Read More
Surely Amigo won't go bustErr looks like the the judge man doesn't care, Amigo better p … Read More
Argo shares back to the moooooon? …I actually like that its main listing is in London, less competiti … Read More
What shares do you think could go …SNG after today's news. If they can get this out anytime soon … Read More
Hey, profit awaits! Free Sharebuyers Newsletter

Receive hot tips you can profit from - only sent when it matters. Twitter: @ShareBuyers.