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Writer's pictureHarsh Patel, CFA

Income vs. Accumulation Share Classes


When buying a fund, you might notice “Inc” or “Acc” tagged on to the name of the fund, and might just think “WTF?” 🤯


This is nothing to be afraid of, however, as these are just different “classes” of the same fund!


An “Income” or “Inc” share simply pays out any dividends or other income received straight into your investment account - you can do whatever you like with that cash. 


An “Accumulation” or “Acc” share reinvests any dividends or other income received back into the fund - you don’t have the cash but the value of that fund will increase as the cash has been reinvested into more stocks / securities. 


Let’s pretend you’ve been looking at a number of funds to buy, and have decided on a fund called “Fantastic Tech Growth Fund” which is available in either “Inc” or “Acc” format. 


This fund is managed by a superstar fund manager which charges an annual fee in return for investing in a diversified portfolio of global technology companies.


You want to invest, but you’re not sure whether to go for the “Inc” or the “Acc” variety! 


Important to note that both of these fund shares are invested in the same individual stocks, usually in the same or very similar proportions. Consequently, there isn’t too much difference in the “market risk” you are taking by investing in this portfolio - both “Inc” and “Acc” share prices will move in a very similar way.


So what’s the difference?


With an Income share class:

  • When a company within this portfolio pays out dividends or other income to its investors, the fund manager would receive that dividend, combine it with any other dividends received from other companies, and pay it out to all “Income" share holders in the fund on a periodic basis (usually every 3 or 6 months)

  • This gives you the hard cash in your account - handy if you rely on that hard cash for income to spend in your day-to-day life!

With an Accumulation share class:

  • When a company within this portfolio pays out dividends or other income to its investors, the fund manager would receive that dividend and spend it on making more investments within the portfolio.

  • This wouldn’t give you the hard cash in your investment account, but if the re-invested dividends go on to make more returns in future, you will benefit from a greater return overall - handy if you don’t have much use for that spare cash and like the fund manager’s investment strategy! 

Please know, the value of investments can go up as well as down and you may receive back less than your original investment, meaning, when investing your capital is at risk.


Disclaimer: At Evarvest we believe in making investing and investment education more accessible, but we don’t provide investment advice and individual investors should make their own decisions. While we try our best, we cannot ensure the accuracy of the information we provide.


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