Accumulating share class

A share class that retains income inside the fund and reflects it in a higher unit price, instead of paying it out to holders as cash.

Example

On a portfolio returning 7% of which 2 points is income, the accumulating unit ends at 53.4733 while the distributing unit ends at 52.4733 having paid out 1.00 - an identical total.

Important

A price chart makes the distributing class look permanently worse by roughly the income yield, compounding. Compare classes on total return or the accumulating one wins every comparison it should not.

Related terms

• Distribution — Cash returned to investors by a fund, typically after an underlying holding is sold or produces income.
• Total return — The complete return from holding an asset over a period: the change in price plus every distribution received, expressed against the amount invested.
• Share class — One of several versions of the same fund portfolio, differing in fee, minimum investment, currency or whether income is paid out or retained.
• Compounding — Earning returns on your past returns, not only on your original money.

Lessons that explain it

• The fund manufactures nothing: pass-through, minus costs — A fund's return is the weighted return of its holdings less what it charges. Knowing that changes what you are actually forecasting when you forecast a fund. (11 min)

All 578 terms in the Investing glossary