Aegon - Threadneedle

MOUNTY

I have Threadneedle uk equity income (acc) in my Aegon pension. I recently contacted them to ask how/ when the dividend income will be paid. I believe the fund pays apprx 3.75 yield.
To my surprise the have informed me that no dividend is payable.
Who is correct?
With accumulation units i assume that the divdend add extra units to share price, usually paid quarterly.
Current value is £49k.

jimjames

They are correct. If you want dividends paid out you need the Inc units. Acc units include dividends in the price automatically.

MOUNTY

So the will the share price show different in accumulation fund than in income fund?

bowlhead99

MOUNTY wrote: »

I have Threadneedle uk equity income (acc) in my Aegon pension. I recently contacted them to ask how/ when the dividend income will be paid. I believe the fund pays apprx 3.75 yield.
To my surprise the have informed me that no dividend is payable.
Who is correct?

It is correct that an accumulation fund does not pay out dividend. What would be declared as dividend is instead retained in the fund resulting in a higher value per unit within the fund and zero cash in your own hand.

With accumulation units i assume that the divdend add extra units to share price, usually paid quarterly.

That sentence doesn't make sense. Do you mean you think the dividend adds extra units to your holding, or adds extra share price to your holding? It can't add 'extra units to your share price'.

What happens with 'inc' or 'dist' units is that the underlying dividends received from the investee companies builds up as value of units over a period and every so often is paid out to you as an income distribution in cash, resulting in a lower retained value per unit than if they had not paid it out in cash and instead reinvested it.

Whereas with the 'acc' units they just accumulate the dividends within the fund, building up the value of your units over the year, and then it is NOT paid out in cash, they simply declare the notional value of dividends (so that people who are taxpayers, unlike you who is holding it in a pension, can do their accounting records) and then merrily reinvest the money in more shares of investee companies. Therefore there is no point where they physically pay out a distrbution to unitholders so the value of the units do not decline like the 'inc' ones would.

MOUNTY wrote: »

So the will the share price show different in accumulation fund than in income fund?

Yes, the share price of the acc units is different from the share price of the inc units. With inc units the share price reduces and turns into cash into the hands of the unitholder. A holder of the inc units can use the received cash to buy more of these cheap units, if they want to do that instead of spending it on buying into another fund. If they reinvest their cash, that way they will end up with more units of lower value each, while the acc holders like you, will have fewer units of a higher value each.

MOUNTY

Thanks, fully understood. Peace of mind now and can resume in adding more funds to reach my target.