Accumulation Fund
What is an accumulation fund?
An accumulation fund is a fund that reinvests dividends (payments from companies to shareholders) automatically. When the fund earns income, the value of your holding goes up instead of cash landing in your account.
Technically, “accumulation” refers to the share class rather than the fund itself. The same fund often offers both accumulation and income versions.
Why choose an accumulation fund?
Less hassle. You don’t need to manually reinvest dividends. Your money compounds automatically, which can help it grow faster over time.
Accumulation fund vs income fund
An income fund pays dividends out as cash. An accumulation fund reinvests them. Same underlying investments, different way of handling the income.
If you’re growing your investments, accumulation usually makes sense. If you need regular income, choose income.
How do you know which type you’re buying?
The fund name usually says. OEICs use “Acc” for accumulation and “Inc” for income. For example: “Vanguard FTSE Global All Cap Index Fund Acc” is the accumulation version.
ETFs also use “Acc” for accumulation. Income ETFs are labelled “Dist” (distributing) instead of “Inc”. For example: “iShares Core MSCI World ETF (Acc)” reinvests dividends automatically.
Key points about accumulation funds
- Dividends reinvested automatically. No cash paid out
- Good for growing your investment. Less effort, compounds over time
- Look for “Acc” in the fund name