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    • 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 2
    • TrustyOven
    • By TrustyOven 11th Mar 17, 11:30 AM
    • 672 Posts
    • 713 Thanks
    TrustyOven
    People here are being a bit too harsh on the OP. Cut them some slack please.

    When I first invested, I too understood the basic principle but didn't understand the mechanics of how the dividends were re-invested.

    It was difficult to see whether the price change of a fund was due to normal market fluctuations instead of the dividends being reinvested.

    And I couldn't get my head around how the fund was tracking how much dividend it was to add to my holding as opposed to other people's holding of the same fund (now I can rationalise it in my head, so it's all good now).
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    • chucknorris
    • By chucknorris 11th Mar 17, 11:36 AM
    • 9,316 Posts
    • 13,971 Thanks
    chucknorris
    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
    We found Fidelity extremely poor at communication, I think the problem is that the people you speak to on the telephone don't understand what is going on, but even worse, instead of saying something like 'I don't know, but I'll transfer you to someone that does' they tend to guess, and they often gave us incorrect information. They compensated my wife a couple of times, and really wound me up a few times. In the end we moved to HL, where we are much happier.
    Chuck Norris can kill two stones with one bird
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    • David Aston
    • By David Aston 11th Mar 17, 11:42 AM
    • 686 Posts
    • 454 Thanks
    David Aston
    Our most successful product by a long way, was Fidelity European Values. In twelve years, they turned our twelve grand into a hundred grand, at which point I panicked and sold. Another year would have seen twice that sum! If you are not happy, replace the product and company with another. There are zillions!
    • masonic
    • By masonic 11th Mar 17, 11:43 AM
    • 9,125 Posts
    • 6,274 Thanks
    masonic
    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!
    Originally posted by AHB2019
    The information is provided in a clear format. There is only a large number of pages because there is a large number of funds. It's only 3 pages per fund and not really any more difficult to understand than the KIID.

    Some retail customers might have difficulty understanding it, but those individuals would be referred to their financial adviser. If a customer doesn't have an adviser, then as a DIY investor the onus is on them to familiarise themselves with these standard industry reporting formats and gain a thorough understanding of any prospective investments before investing.
    • masonic
    • By masonic 11th Mar 17, 11:47 AM
    • 9,125 Posts
    • 6,274 Thanks
    masonic
    People here are being a bit too harsh on the OP. Cut them some slack please.

    When I first invested, I too understood the basic principle but didn't understand the mechanics of how the dividends were re-invested.

    It was difficult to see whether the price change of a fund was due to normal market fluctuations instead of the dividends being reinvested.

    And I couldn't get my head around how the fund was tracking how much dividend it was to add to my holding as opposed to other people's holding of the same fund (now I can rationalise it in my head, so it's all good now).
    Originally posted by TrustyOven
    It's fair enough not understanding. People here are happy to help those who don't really understand how their investments are working in practice. However, I don't think it's the providers fault when the customer's understanding is somewhat lacking. Most importantly, it isn't a scam.
    • ColdIron
    • By ColdIron 11th Mar 17, 11:48 AM
    • 3,579 Posts
    • 4,291 Thanks
    ColdIron
    People here are being a bit too harsh on the OP.
    Originally posted by TrustyOven
    Maybe it was the inflammatory title suggesting that Fidelity was involved in some sort of wrongdoing?
    • jimjames
    • By jimjames 11th Mar 17, 12:41 PM
    • 12,189 Posts
    • 10,708 Thanks
    jimjames
    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 does. Compare the graphs and you'll see
    Remember the saying: if it looks too good to be true it almost certainly is.
    • AnotherJoe
    • By AnotherJoe 11th Mar 17, 4:13 PM
    • 7,600 Posts
    • 8,201 Thanks
    AnotherJoe
    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?

    yes, compare it with its "sister" income fund

    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
    The best an index fund can do is track the index with a small loss. It should never outperform the index (and certainly not massively) !! because its aim is to track it and the only way it could outperform it would by by holding shares in different proportions to the FTSE AS which it shouldn't do.

    What it is compared with should be the FTSE AS with dividends reinvested otherwise its not a good comparison since there should be a 2-3% variance each year in favor of the acc fund.

    When choosing an index tracker IMO the only metric that matters is, how low the management fee is (assuming it is tracking well). The management fee must detract from the tracking since there's nowhere else for it come from. This fund seems to have a very low fee (0.08%) so thats likely the best you'll get.
    • masonic
    • By masonic 11th Mar 17, 4:37 PM
    • 9,125 Posts
    • 6,274 Thanks
    masonic
    The best an index fund can do is track the index with a small loss. It should never outperform the index (and certainly not massively) !! because its aim is to track it and the only way it could outperform it would by by holding shares in different proportions to the FTSE AS which it shouldn't do.
    Originally posted by AnotherJoe
    I think the point being made above was that the difference in price performance would approximate to the dividend income retained by the accumulation fund. Though describing that as "massive" would be quite an overstatement.
    • AnotherJoe
    • By AnotherJoe 11th Mar 17, 4:39 PM
    • 7,600 Posts
    • 8,201 Thanks
    AnotherJoe
    I think the point being made above was that the difference in price performance would approximate to the dividend income retained by the accumulation fund. Though describing that as "massive" would be quite an overstatement.
    Originally posted by masonic
    Over say 10-20 years that could be significant, indeed, dare I say it .... massive
    • masonic
    • By masonic 11th Mar 17, 5:03 PM
    • 9,125 Posts
    • 6,274 Thanks
    masonic
    Over say 10-20 years that could be significant, indeed, dare I say it .... massive
    Originally posted by AnotherJoe
    I'm sure that would be the case, but the unit class the OP is trying to compare launched on 27th May 2014, so the retained income since inception is unlikely to be quite that significant.
    • AnotherJoe
    • By AnotherJoe 11th Mar 17, 5:06 PM
    • 7,600 Posts
    • 8,201 Thanks
    AnotherJoe
    I'm sure that would be the case, but the unit class the OP is trying to compare launched on 27th May 2014, so the retained income since inception is unlikely to be quite that significant.
    Originally posted by masonic
    In that case, yes I agree, "massive" is an unreal expectation
    But possibly not surprising for someone who thinks the FTSE AS dividends will provide massive growth !
    • Chickereeeee
    • By Chickereeeee 11th Mar 17, 6:26 PM
    • 422 Posts
    • 262 Thanks
    Chickereeeee
    What it is compared with should be the FTSE AS with dividends reinvested otherwise its not a good comparison since there should be a 2-3% variance each year in favor of the acc fund.
    .
    Originally posted by AnotherJoe
    It is easy for a novice to get confused. In the OPs case, he did not see the small wording at the bottom of the performace graph on Trustnet:

    "Price total return performance figures are calculated on a bid price to bid price basis (mid to mid for OEICs) with net income (dividends) reinvested"

    and assumed the FTSE index line was a notional share price, ie without dividends re-invested.

    Let he who has not (however briefly) made the same mistake when switching between charts of fund performance (usually showing dividends re-invested) and Investment Trusts or shares (usually showing just NAV or share price, dvidends NOT invested) cast the first stone....

    C
    • le loup
    • By le loup 11th Mar 17, 6:32 PM
    • 3,641 Posts
    • 3,572 Thanks
    le loup
    Maybe I and others have been a little unfair to the OP but suggesting Fidelity were participating in a scam was red rag time.

    The way of the word today is that everything is a scam and I want compensation.
    • AnotherJoe
    • By AnotherJoe 11th Mar 17, 7:24 PM
    • 7,600 Posts
    • 8,201 Thanks
    AnotherJoe
    It is easy for a novice to get confused. In the OPs case, he did not see the small wording at the bottom of the performace graph on Trustnet:

    "Price total return performance figures are calculated on a bid price to bid price basis (mid to mid for OEICs) with net income (dividends) reinvested"

    and assumed the FTSE index line was a notional share price, ie without dividends re-invested.

    Let he who has not (however briefly) made the same mistake when switching between charts of fund performance (usually showing dividends re-invested) and Investment Trusts or shares (usually showing just NAV or share price, dvidends NOT invested) cast the first stone....

    C
    Originally posted by Chickereeeee
    What, the same mistake when not understanding some financial output, of immediately accusing a major financial companies fund of being a scam ?

    Dont think I've done that, AFAICR.
    Last edited by AnotherJoe; 12-03-2017 at 7:21 AM. Reason: Typos
    • dunstonh
    • By dunstonh 12th Mar 17, 12:00 AM
    • 89,603 Posts
    • 56,092 Thanks
    dunstonh
    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.
    Fidelity is a supplier. Not an adviser or intermediary. It supplies plenty of written material but it is not set up to train consumers.

    One assumes that this is not your only fund as it would be pretty bad investing if it is.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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