Acc funds - how can you be sure they reinvest?

mrje103

After some advice/information on acc funds and how they ‘pay’ their dividends.
As I understand it, acc funds automatically reinvest the dividends into the fund and so might be preferable for someone looking to try and grow a pot of money. But how can you be sure that this is happening? I have held a modest amount in VLS80 for just over a year. As far as I can tell, nothing is showing on my statement to indicate that a dividend has been reinvested and that my own holdings have grown as a result of me holding more units. Am I missing something, or is this not how an acc fund works?
Ditto, for the junior S&S ISA I have with Hargreaves for my son, and I have held that for 4 years.
Starting to wonder if it would be preferable to hold income funds and then just reinvest the dividends myself.

green_man

I don’t think you will see anything directly with the fund w.r.t dividends. But if you have a fund with and equivalent ‘inc’ class you can compare the capital performance over a period, you should find the capital value of the acc fund increasing faster than the inc fund at a rate equivalent to the dividend payout.

greendoor665

You won't own more units. You will see the dividends as an increase in the value of the units you do own.

Compare the unit price of the accumulation and income funds. Both would have started at same value, but now the accumulation fund unit price is much higher.

lindabea

Purely out of interest, the Distribution rate for the VLS80 fund is shown on the Vanguard website as £3.22 per unit. Would this mean that if you hold 100 units in this fund, you would have received £322 as dividend on 31/05/2019.

Tom99

lindabea wrote: »

Purely out of interest, the Distribution rate for the VLS80 fund is shown on the Vanguard website as £3.22 per unit. Would this mean that if you hold 100 units in this fund, you would have received £322 as dividend on 31/05/2019.

I think £3.22 was the rate for the INC units, the amount for the ACC units would be a bit more because the price of the ACC units is more.The percentage would be the same though.

lindabea

Yes - the £3.22 is the distribution rate for the INC class. But I think yu missed out a key word.. 'a bit what' presumably more or less!!

At this stage, I'm more concerned with the calculation of the dividend for the INC fund. Is it a simple multiplication of the rate X units held or is there more to it than this

Tom99

mrje103 wrote: »

After some advice/information on acc funds and how they ‘pay’ their dividends.
As I understand it, acc funds automatically reinvest the dividends into the fund and so might be preferable for someone looking to try and grow a pot of money. But how can you be sure that this is happening? I have held a modest amount in VLS80 for just over a year. As far as I can tell, nothing is showing on my statement to indicate that a dividend has been reinvested and that my own holdings have grown as a result of me holding more units. Am I missing something, or is this not how an acc fund works?
Ditto, for the junior S&S ISA I have with Hargreaves for my son, and I have held that for 4 years.
Starting to wonder if it would be preferable to hold income funds and then just reinvest the dividends myself.

The VLS INC fund value has gone up 9.25% in the past year and the ACC fund 11.25% the difference is accounted for by the INC fund paying a dividend.

Tom99

lindabea wrote: »

Yes - the £3.22 is the distribution rate for the INC class. But I think yu missed out a key word.. 'a bit what' presumably more or less!!

At this stage, I'm more concerned with the calculation of the dividend for the INC fund. Is it a simple multiplication of the rate X units held or is there more to it than this

Yes £3.229333 per unit with the INC fund units going ex-div on 1st April so £3.229 x number of units held on 31st March.
The ACC units were worth about c11% more than the INC units so the ACC dividend would be very roughly £3.59. The actual figure is probably published somewhere.

lindabea

Tom99 wrote: »

Yes £3.229333 per unit with the INC fund units going ex-div on 1st April so £3.229 x number of units held on 31st March.
The ACC units were worth about c11% more than the INC units so the ACC dividend would be very roughly £3.59. The actual figure is probably published somewhere.

OK Thank you for your reply. Now to get a better understanding, if I had 100 units in the INC fund, I would receive £322 in my bank account.
So, to get back to the OP's question, how is the dividend applied to the ACC fund? I don't see on the Vanguard site that the unit price of the ACC fund has gone up by £3.59 in April 2019 or around the payment date.

Tom99

lindabea wrote: »

OK Thank you for your reply. Now to get a better understanding, if I had 100 units in the INC fund, I would receive £322 in my bank account.
So, to get back to the OP's question, how is the dividend applied to the ACC fund? I don't see on the Vanguard site that the unit price of the ACC fund has gone up by £3.59 in April 2019 or around the payment date.

The ACC unit price does not jump up in price, the INC unit price jumps down on the ex-div date by the amount of dividend to be paid out.
If you ignore any market movement over the one day the price of the INC units will be £3.22 less on 1st April than they were on 31st March and you 100 units will be worth £322 less because even if you sold them on 1st April you would still be paid the £322 dividend on 31st May.

SonOf

Acc funds - how can you be sure they reinvest?

Simple. Compare the returns of the inc version reinvested vs the acc version. They will be the same.