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Could you help me? I hold a HSBC investment tracker, and am trying to understand the difference between Accumulation Share Class, and how this differs to that of Income Share Class.
Please could you explain how they work in terms of value. With Accumulation Share Class, my unit cost is greater, and I haven't received a dividend payment to re-invest.
Kind regards.
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8With accumulation units the dividend payments made by the companies who's shares the fund holds are automatically reinvested in the fund and this is reflected in the higher price/value of the units.
With income units the dividends are paid separately. So, with the income units, these dividends can be withdrawn by the investor if he/she so wishes or invested in a different fund or share. But, of course, the value of the units will be lower to reflect the fact that these dividends have been withdrawn or invested elsewhere.
There's no real difference in value - either way you receive any dividends paid net of the annual management fees/total expenses charged by the fund managers.
Posted on 31 October 2011 |
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