Accumulation units - ex-dividend and payment date confusion

ColdIron

haveabreak said:

ColdIron said:

haveabreak said:

"InvesterJones said:

when exactly do the dividend proceeds that would otherwise go to an income payment increase the value of the units? Is it on the ex-div date, the payment date, or neither and instead a gradual accumulation through the year (ie daily)?

On the payment date. On this date it increases the value of the units.

I'm afraid not, the unit value does not 'jump' on the Payment Date

Between ex-dividend dates the dividends from the underlying holdings are paid into the fund (both Acc and Inc) in dribs and drabs as they arise and slowly increase the unit price to reflect the added value to the fund. On the ex-date the unit price of the Inc class will fall as new investors no longer have the rights to the dividend, the Acc class will be unaffected. On the Payment Date the dividends will be paid out to to holders of the Inc class and will not affect the unit price of either class

Yes that's how equalisation comes into play from what i recall. I was talking about the book cost of the units. You can increase the book cost of the units by the div amount on the div payment date i.e. when working out capital gain. Will correct my post.

Not quite. If you purchase units between ex dividends dates you will have paid for the dividends accrued so far as part of the unit price. As those dividends were not earned and should not be taxed as dividends, for the Income class they will be returned to you as a capital repayment and will decrease the book cost

This is a good explanation

https://www.willisowen.co.uk/help/equalisation-explained