Fund terminology help

zudecke

Hi

Can anyone tell me what the differences are between "growth" & "dividend" and "income" vs "accumulation"?

In HL, most of the funds I search for are offered as either "income" or "accumulation" and I understood the difference to be a) accumulation the profits are reinvested and b) income the investor is paid out.

So how does that differ from "growth" & "dividend"?

Thanks!

Z

AnotherJoe

I would expect that growth and dividend funds apply to how the fund operates. The former looks to grow, the latter to pay out dividends.
But I'd need to see an example of these.

Alexland

Accumulation and Income fund types are established fund manager agnostic terminology.

Words like Growth, Dividend and Income in the name of the fund could mean anything so you might need to check with the fund manager's marketing department!

Alex

David_Evans

It could be that 'growth' and 'dividend' refers to the actual stocks that are selected for an active fund.

Whereas 'income' and 'accumulation' refers to what happens to the dividends from the stocks once selected.

But you should ask them directly.

Mr.Saver

David_Evans wrote: »

It could be that 'growth' and 'dividend' refers to the actual stocks that are selected for an active fund.

Passive funds can have 'growth' and 'dividend' approaches too, it's just a parameter telling the computer to prefer one type of stocks over the other.

zudecke

It appears like "income" & "accumulation" are the technical terms for the units, while "dividend" & "growth" are the terms for the respective strategies - if that's not accurate than I'm none the wiser...

Mr.Saver

zudecke wrote: »

It appears like "income" & "accumulation" are the technical terms for the units, while "dividend" & "growth" are the terms for the respective strategies - if that's not accurate than I'm none the wiser...

Just be careful that the "dividend" and "growth" are not always the actual fund strategies, but rather the advertised strategies.

zudecke

Mr.Saver wrote: »

Just be careful that the "dividend" and "growth" are not always the actual fund strategies, but rather the advertised strategies.

How would you know?

Mr.Saver

zudecke wrote: »

How would you know?

Because the regulation doesn't go that far. There is nothing stops a company names their product "Get Rich Fast". But can you really get rich fast by buying that product? I doubt about it.

[Deleted User]

Hi,


from HL Guide to Funds:


Income vs accumulation

Many funds, both active and passive, give investors the choice between investing in either income or accumulation units.



The difference is how the income generated by the investments in the fund is treated.


For example, if a fund is invested in shares, these shares will often pay dividends and thus generate an income.



The income version of a fund will distribute these dividends to investors as cash.



With the accumulation version, the fund manager instead uses the cash to buy more shares, increasing the value of each unit in the fund.


Those investing with the aim of generating an income should choose income units.



Those looking for long-term growth in their investment will probably wish to choose accumulation units.

Linton

Acc and Inc as has been explained define what the fund does with the dividends - either reinvest or pay out separately.


Growth and dividend or income are used to describe the type of companies in which a fund, or an individual, may choose to invest. Growth companies hope their shares will be at a significantly higher price in the future - in the extreme case you have tech start ups. They wont pay out significant dividends, and may not even be profitable at the moment.


A pure dividend paying company would be bought for the steady income and an investor would not expect major capital growth in the future. They are of necessity profitable, possibly highly so. A typical dividend company could be something like a utility with a limited but guaranteed market.


Companies can change - 20 years ago Vodaphone and BT were growth companies, now they are more like utilities.