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  • FIRST POST
    • AHB2019
    • By AHB2019 11th Mar 17, 9:47 AM
    • 8Posts
    • 2Thanks
    AHB2019
    Fidelity Accumulation Fund - a scam?
    • #1
    • 11th Mar 17, 9:47 AM
    Fidelity Accumulation Fund - a scam? 11th Mar 17 at 9:47 AM
    I have a Fidelity Index UK Fund P-Acc [PIUKA], but I do not understand how the accumulation part of it works, and the Fidelity call centre cannot answer my questions. All the key investor information and fund documents are completely silent on it. My annual statement just shows the money they are taking out from it to pay their fees; there is no indication of reinvestment. If they were fully reinvesting all the dividends, I would have expected them to highlight how much has been reinvested, and what impact that has on the unit price, but they say nothing. How do I know they are reinvesting the dividends for my benefit, rather than siphoning them off? As an accumulation fund, you would have thought the fund would out perform the market, but it seems to be underperforming, which makes me even more suspicious.

    Can anyone explain how this works?

    Thanks very much!
Page 1
    • le loup
    • By le loup 11th Mar 17, 9:52 AM
    • 3,664 Posts
    • 3,594 Thanks
    le loup
    • #2
    • 11th Mar 17, 9:52 AM
    • #2
    • 11th Mar 17, 9:52 AM
    Is this a serious question?
    Fidelity, one of the largest investment firms in the world is scamming you?
    • fun4everyone
    • By fun4everyone 11th Mar 17, 9:53 AM
    • 850 Posts
    • 1,387 Thanks
    fun4everyone
    • #3
    • 11th Mar 17, 9:53 AM
    • #3
    • 11th Mar 17, 9:53 AM
    This poster must be someone on the wind up?
    • NoMore
    • By NoMore 11th Mar 17, 9:54 AM
    • 146 Posts
    • 120 Thanks
    NoMore
    • #4
    • 11th Mar 17, 9:54 AM
    • #4
    • 11th Mar 17, 9:54 AM
    http://monevator.com/accumulation-funds-dividends/

    hth
    • ColdIron
    • By ColdIron 11th Mar 17, 9:55 AM
    • 3,679 Posts
    • 4,424 Thanks
    ColdIron
    • #5
    • 11th Mar 17, 9:55 AM
    • #5
    • 11th Mar 17, 9:55 AM
    It's a scam, thanks for blowing the lid off
    • murmeltier
    • By murmeltier 11th Mar 17, 9:58 AM
    • 82 Posts
    • 28 Thanks
    murmeltier
    • #6
    • 11th Mar 17, 9:58 AM
    • #6
    • 11th Mar 17, 9:58 AM
    OP, please consider changing the subject of this thread
    • AHB2019
    • By AHB2019 11th Mar 17, 10:03 AM
    • 8 Posts
    • 2 Thanks
    AHB2019
    • #7
    • 11th Mar 17, 10:03 AM
    • #7
    • 11th Mar 17, 10:03 AM
    It is a serious question; although I don't think it is likely to be a scam, it is incredibly opaque. What evidence is there of the reinvestment of dividends? Why does Fidelity not provide any information about the benefits to me of the accumulation (e.g. highlighting the impact on the unit price; mentioning how much was reinvested etc) - is it just poor marketing by them?

    Thank you NoMore for the only constructive answer - but I have not been able to find out from trustnet how it works on this fund. I will carry on digging, but it is ridiculous that it is this difficult.
    • coyrls
    • By coyrls 11th Mar 17, 10:07 AM
    • 922 Posts
    • 967 Thanks
    coyrls
    • #8
    • 11th Mar 17, 10:07 AM
    • #8
    • 11th Mar 17, 10:07 AM
    You can see the dividend history for the fund here: https://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=FIMNI&univ=O&typeCode=FK41 T&pageType=dividends

    It is not difficult to understand how it works, see the Monevator link above.
    • AHB2019
    • By AHB2019 11th Mar 17, 10:15 AM
    • 8 Posts
    • 2 Thanks
    AHB2019
    • #9
    • 11th Mar 17, 10:15 AM
    • #9
    • 11th Mar 17, 10:15 AM
    Thank you so much coyrls. This gives the following information:

    Fidelity Index UK A
    Dividend type Dividend amount Tax indicator Ex dividend date Payment date
    Interim 2.563 p Dividend 01-Mar-2016 30-Apr-2016

    But (please be patient with my questions!) how do I know that the dividend was entirely reinvested (as opposed to partially reinvested), and is there any way of finding out what effect the dividend reinvestment had on the unit price?

    Another question: the chart shows the fund performance compared to the FTSE all-share index. Surely if it was an accumulation fund it should massively outperform the index, as it is reinvesting rather than providing an income.

    Apologies if these questions are seemingly dumb.
    • murmeltier
    • By murmeltier 11th Mar 17, 10:18 AM
    • 82 Posts
    • 28 Thanks
    murmeltier
    (This is a very simplified answer):

    The price of a unit of a fund is the sum of the values of all its underlying holdings plus the cash component divided by the number of outstanding units.

    The cash component contains among other things dividends that the fund has received from its underlying holdings.

    When inc units make a distribution (quarterly, annually, whenever), the cash component is reduced by the amount of cash that is paid out to the investors.

    Result: the price of inc units is now reduced by this amount (total amount paid out divided by number of units outstanding).

    Acc units, on the other hand, do not make any distributions. So the price of an acc unit will not change (all else being equal).

    End result: inc units have slightly reduced in price (but you have now cash in the bank), acc units remain unchanged (but the cash remains in the fund where it will be re-invested by the fund manager).

    Of course the reality is slightly more complicated.

    I would suggest you also look at the annual report that Fidelity publish (it's a very long and boring document though!)
    • coyrls
    • By coyrls 11th Mar 17, 10:25 AM
    • 922 Posts
    • 967 Thanks
    coyrls
    But (please be patient with my questions!) how do I know that the dividend was entirely reinvested (as opposed to partially reinvested), and is there any way of finding out what effect the dividend reinvestment had on the unit price?

    Another question: the chart shows the fund performance compared to the FTSE all-share index. Surely if it was an accumulation fund it should massively outperform the index, as it is reinvesting rather than providing an income.

    Apologies if these questions are seemingly dumb.
    Originally posted by AHB2019
    1) Compare a graph of the inc version with the acc version and you will see the effect of the reinvested dividends.
    2) The index is with dividends re-invested, if you use the Trustnet graphing tools: https://www.trustnet.com/Tool/Charting.aspx?typeCode=NUKX,NB:AFIA,NB:AFIB,NB:AFI C
    you can compare the fund against the index without dividends reinvested.
    (click down on "Chart Basis" and choose "without income reinvested").
    Last edited by coyrls; 11-03-2017 at 10:30 AM. Reason: messed up link
    • AHB2019
    • By AHB2019 11th Mar 17, 10:29 AM
    • 8 Posts
    • 2 Thanks
    AHB2019
    Thank you murmeltier, that is very helpful.

    Presumably then a FTSE All Share tracking accumulation fund (like this Fidelity Index UK Fund) should outperform the FSTE All Share index (unless the service charges are consistently more than the dividend payments, which they can't be)? But then why is that not the case?
    • Chickereeeee
    • By Chickereeeee 11th Mar 17, 10:30 AM
    • 423 Posts
    • 262 Thanks
    Chickereeeee
    Another question: the chart shows the fund performance compared to the FTSE all-share index. Surely if it was an accumulation fund it should massively outperform the index, as it is reinvesting rather than providing an income.
    Originally posted by AHB2019
    It is often not clear if a chart is showing simple share price or cumulative performance, including dividends. In this case it is the latter. Or to put it more simply. the that chart is showing the Fidelity Index Acc fund compared to the FTSE All_Share Index, with dividends re-invested. Which is the same thing (excluding charges)

    The easiest way to see what you are looking for, is to go to the Trustnet site, select 'tools' and 'charting' from the header, and compare your fund with the FTSE All Share Index.

    You can then select if dividends are shown re-invested or not. In your case, the Accumulation fund will not change between the two (as it is not paying out dividends), but the FTSE Index will.

    C
    Last edited by Chickereeeee; 11-03-2017 at 10:38 AM.
    • AHB2019
    • By AHB2019 11th Mar 17, 10:37 AM
    • 8 Posts
    • 2 Thanks
    AHB2019
    Thank you all for your replies; I now understand it much better. If anyone from Fidelity or any other retail investment firm is reading this, there is a huge opportunity to explain to your customers how the accumulation works for them, highlighting in the annual statement how much dividends are received and reinvested, what impact that has on the unit price etc. I am a trained mathematician, who works in banking, and if a customer like me has to resort to the good folk of MoneySavingExpert forums, then Fidelity really does have a problem in the way it communicates with its customers.
    • GDB2222
    • By GDB2222 11th Mar 17, 10:42 AM
    • 14,180 Posts
    • 76,289 Thanks
    GDB2222
    I am astonished that a mathematician working in banking didn't understand accumulation units before investing in them.
    No reliance should be placed on the above! Absolutely none, do you hear?
    • masonic
    • By masonic 11th Mar 17, 10:46 AM
    • 9,124 Posts
    • 6,274 Thanks
    masonic
    Thank you all for your replies; I now understand it much better. If anyone from Fidelity or any other retail investment firm is reading this, there is a huge opportunity to explain to your customers how the accumulation works for them, highlighting in the annual statement how much dividends are received and reinvested, what impact that has on the unit price etc. I am a trained mathematician, who works in banking, and if a customer like me has to resort to the good folk of MoneySavingExpert forums, then Fidelity really does have a problem in the way it communicates with its customers.
    Originally posted by AHB2019
    This information must be provided because it is needed by those who must declare the notional dividends to HMRC and pay tax on the income. You are probably just not looking in the right place.
    • AHB2019
    • By AHB2019 11th Mar 17, 10:47 AM
    • 8 Posts
    • 2 Thanks
    AHB2019
    well there are many branches of banking, and I understood the principles of accumulation but not the detail (and evidence) of how it works.
    • AHB2019
    • By AHB2019 11th Mar 17, 10:50 AM
    • 8 Posts
    • 2 Thanks
    AHB2019
    Well I have spent a lot of time looking at a lot of Fidelity documents and seen nothing; there is certainly nothing in my annual statement, In my case, it is in an ISA, so presumably they don't need to provide that information for HMRC purposes.
    • masonic
    • By masonic 11th Mar 17, 11:04 AM
    • 9,124 Posts
    • 6,274 Thanks
    masonic
    Well I have spent a lot of time looking at a lot of Fidelity documents and seen nothing; there is certainly nothing in my annual statement, In my case, it is in an ISA, so presumably they don't need to provide that information for HMRC purposes.
    Originally posted by AHB2019
    It took me no more than a couple of minutes to go to the Fidelity website, look up the fund, click "Important Documents", "Other related documents", and select the Annual Short Report 29/02/2016.

    Skim reading the contents, I saw that Fidelity Index UK Fund is detailed from page 237 (it's not such a short report). On page 239, there is a table showing "Retained distributions on accumulation shares" for Class W Accumulation shares of 3.28p per unit for the previous 12 months.

    Edit: In answer to your other question, for unwrapped accounts, the platform would normally provide a consolidated tax voucher that customers can use to report to HMRC, but this is not needed for ISAs.
    Last edited by masonic; 11-03-2017 at 11:14 AM.
    • AHB2019
    • By AHB2019 11th Mar 17, 11:26 AM
    • 8 Posts
    • 2 Thanks
    AHB2019
    Thank you Masonic. I am not sure that putting something on page 237 of an annual report (presumably aimed at industry professionals) would count as clear communication with retail customers!
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