Accumulation vs distribution

leosayer

Pat38493 said:

Couple of additional points:

Leosayers explanation on the first answer is slightly simplified in that the fund won’t necessarily drop by the exact amount of the dividend paid out - there are various dates like “declaration date”, “ex dividend date”, “payment date”.  Also the valuation may change based on investor’s forecasts about the next dividend so it’s not so simple that the price will change on that day by exactly that amount to the penny (at least by my observation).

There is a site called Dividend max that gives some useful information about dividends paid out for many of the funds - you have to pay to get forecasts but you can get the history for free.

Unfortunately I never found a site that gives you a “trailing annualised dividends over time” figure like you can get with overall returns.

The price change occurs on the xd date. 

It is generally hard to see the effect because it gets lost in the noise of other factors that cause a fund's price to move such as stock prices and exchange rates.  However it can be seen clearly on income class money market funds such as the example below.

https://www.fidelity.co.uk/factsheet-data/factsheet/GB00B1C42449-abrdn-Sterling-Money-Market-Fund-I-Inc/growth-chart

ColdIron

leosayer said:

Pat38493 said:

Couple of additional points:

Leosayers explanation on the first answer is slightly simplified in that the fund won’t necessarily drop by the exact amount of the dividend paid out - there are various dates like “declaration date”, “ex dividend date”, “payment date”.  Also the valuation may change based on investor’s forecasts about the next dividend so it’s not so simple that the price will change on that day by exactly that amount to the penny (at least by my observation).

There is a site called Dividend max that gives some useful information about dividends paid out for many of the funds - you have to pay to get forecasts but you can get the history for free.

Unfortunately I never found a site that gives you a “trailing annualised dividends over time” figure like you can get with overall returns.

It is generally hard to see the effect because it gets lost in the noise of other factors that cause a fund's price to move such as stock prices and exchange rates.  However it can be seen clearly on income class money market funds such as the example below.

Even more demonstrative if you superimpose Acc and Inc of the same fund though only for the last distribution

AlanP_2

Linton said:

Holding income funds in ISAs minimises tax. 

Just picking up on this aspect, can you explain why please @Linton as I can't see why tax considerations would come in to it? 

Thanks 

Linton

AlanP_2 said:

Linton said:

Holding income funds in ISAs minimises tax. 

Just picking up on this aspect, can you explain why please @Linton as I can't see why tax considerations would come in to it? 

Thanks 

Using S&S ISAs for on-going investment income is particularly valuable if you would otherwise have to pay tax in a higher rate band when all your income streams are active.

AlanP_2

Linton said:

AlanP_2 said:

Linton said:

Holding income funds in ISAs minimises tax. 

Just picking up on this aspect, can you explain why please @Linton as I can't see why tax considerations would come in to it? 

Thanks 

Using S&S ISAs for on-going investment income is particularly valuable if you would otherwise have to pay tax in a higher rate band when all your income streams are active.

But whether you use an Acc fund in the SIPP or an INC fund and reinvest the income doesn't affect the value of the SIPP overall and tax doesn't come in to play until you withdraw funds. 

Nor does it make a difference in an ISA from what I can see when comparing the same fund in an ACC or an INC variant. 

Or, do you mean put funds intentionally aimed at income / yield in the ISA as opposed to the Acc / Inc choices which I initially thought of? 

If the latter, sorry I misunderstood your post and agree that makes sense.