Income Fund
What is an income fund?
An income fund is a fund that pays dividends (payments from companies to shareholders) out as cash. When the fund earns income, the money lands in your account instead of being reinvested.
Technically, “income” refers to the share class rather than the fund itself. The same fund often offers both income and accumulation versions.
Why choose an income fund?
If you want regular income from your investments. Retirees often use income funds to supplement their pension without selling their holdings.
Income fund vs accumulation fund
An accumulation fund reinvests dividends automatically. An income fund pays them out. Same underlying investments, different way of handling the income.
If you need cash from your investments, choose income. If you’re still growing your pot, accumulation is usually simpler.
How do you know which type you’re buying?
The fund name usually says. OEICs use “Inc” for income and “Acc” for accumulation. For example: “Vanguard FTSE Global All Cap Index Fund Inc” is the income version.
ETFs use different labels. “Dist” means distributing, which is the same as income. “Acc” still means accumulating. For example: “iShares Core MSCI World ETF (Dist)” pays dividends out.
Key points about income funds
- Dividends paid out as cash, not reinvested
- Good if you need regular income without selling your investments
- Look for “Inc” or “Dist” in the fund name