Help me understand "accumulation" versus "income" funds

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  • ColdIron
    ColdIron Posts: 8,910
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    Then they'll be purchases with a date and a price. Perhaps you have instructed them to reinvest dividends
  • ColdIron wrote: »
    Then they'll be purchases with a date and a price. Perhaps you have instructed them to reinvest dividends


    But the funds are accumulation, so no dividend to reinvest, that was the point of my original post on this thread.
  • ColdIron
    ColdIron Posts: 8,910
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    Are they 'corporate actions'? Do they have a zero unit cost and zero quantity but a small negative cost figure?
  • AnotherJoe
    AnotherJoe Posts: 19,622
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    edited 21 February 2019 at 9:29PM
    Well I just checked my HL account and I definately get units added, both VLS60 and Fundsmith. Small amounts mind. There are even contract notes available.
    Then you must be instructing them to buy more units somehow.
    Presumably through reinvestment of income if it's not through a regular monthly saving.
    It doesn't happen any other way, you dont just get new units added (or taken away) except in exceptional circumstances such as stock splits.

    Edit: what is your fundmith ? I hold that (acc) and have never had any units added. Are you sure yours isn't the inc version? This is mine FUNDSMITH EQUITY CLASS I - ACCUMULATION (GBP)
  • The extra units could be loyalty bonus for funds bought after April 2014 which has to be reinvested (can no longer be paid as cash). This often reinvests by default in the funds that earned the loyalty bonus.
  • ColdIron
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    Good idea but HL don't pay a loyalty bonus on Fundsmith or VLS
  • AnotherJoe
    AnotherJoe Posts: 19,622
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    I suggest the OP asks HL tomorrow. Whatever it is it's not an inherent property of acc funds that units appear and disappear !
  • AnotherJoe wrote: »
    Then you must be instructing them to buy more units somehow.
    Presumably through reinvestment of income if it's not through a regular monthly saving.
    It doesn't happen any other way, you dont just get new units added (or taken away) except in exceptional circumstances such as stock splits.

    Edit: what is your fundmith ? I hold that (acc) and have never had any units added. Are you sure yours isn't the inc version? This is mine FUNDSMITH EQUITY CLASS I - ACCUMULATION (GBP)
    I think I'm distracting from the OPs original query, so will refrain from here. However, by way of an example, I hold Fundsmith Equity Accumulation - Class I (GBP) and have a Contract Note for the purchase of 2.86 units and a consideration of £10.32. The Contract Note starts with a B, not the E suffix for a coprpoate action. I certainly didn't instruct this, and the income history shows zero transactions as expected.

    Maybe Terry likes me, or has taken pity as until recently I also held Woodford Equity Income :(
  • AnotherJoe
    AnotherJoe Posts: 19,622
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    I think I'm distracting from the OPs original query, so will refrain from here. However, by way of an example, I hold Fundsmith Equity Accumulation - Class I (GBP) and have a Contract Note for the purchase of 2.86 units and a consideration of £10.32. The Contract Note starts with a B, not the E suffix for a coprpoate action. I certainly didn't instruct this, and the income history shows zero transactions as expected.

    Maybe Terry likes me, or has taken pity as until recently I also held Woodford Equity Income :(


    I think you are very much on topic, I'm intrigued to know where these additional units are coming from and also why I'm not getting any !


    FWIW the amount of £10.36 is perhaps telling since HL will accumulate money and once you get to £10 make a purchase (if youve specified reinvestment). So it would appear you are accumulating income from something and for whatever reason HL is choosing Fundsmith units to purchase.

    Could it be as simple as, there is an instruction "hanging around" in your account to use income to purchase Fundsmith? Or is Fundsmith your biggest or smallest fund holding? It may be that they have a rule such as to invest in the biggest holding (or the smallest ) at the time your income reaches £10?



    I found this supposedly from HL but i cant find it direct on their website, my emphasis in red underlining.


    Any dividends you receive will be held in the income account and reinvested, where
    we are able, in more of the same type of fund or share that paid the income


    So, that doesn't say that income from Fund X will be invested in only Fund X. It could be in "Y" if that is the same "type" . But i cant find the rules as to how they decide.
  • ColdIron
    ColdIron Posts: 8,910
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    I think you may be onto something. Although the two funds mentioned do not pay a loyalty bonus, Johnnyboy11 may have other funds that do. One of the loyalty bonus options (the first) is to reinvest into the largest holding
    • How do the Loyalty Bonus Options Work?
    • Automatically reinvested (Largest Holding): Your loyalty bonus will be automatically reinvested into your largest holding when it reaches a minimum of £10.00. The automatic reinvestments take place monthly.
    Someone or something is instructing the purchase, that's what the contract note is confirming, it certainly isn't the fairies
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