What’s the difference between accumulation and income units in a fund?
24 June, 2025
Question by Amir
I’m trying to buy a fund and it’s offering ‘acc’ or ‘inc’ units. What’s the actual difference and how do I know which one to pick?
Answered by Boring Money
When you purchase shares in a fund, you might come across different versions of the same fund, typically with either 'Acc' or 'Inc' at the end. They stand for:
- ‘Acc’ = Accumulation
- ‘Inc’ = Income
They're still the same fund, but the difference lies in what happens to any A cash bonus shareholders get in return for investing in something. Dividends can be paid out on a monthly, biannual or annual basis. or interest it earns from its The assets or investments within a larger investment product or portfolio. For example, shares, bonds, and commodities may be underlying investments in a multi-asset fund. investments.
With accumulation units, any income the fund makes gets automatically reinvested. You don’t see it as cash in your account - instead, it reinvests this cash to buy more units of the fund, quietly growing your investment through the power of When you earn interest not just on your original savings, but also on the interest you've already earned. It's like earning interest on your interest. Over time, this creates a snowball effect and is one of the most compelling arguments for long-term investing. While it's often explained using interest on cash savings, compounding also applies to investment gains like dividends and capital growth..
With income units, any income is paid out to you (the shareholder) as cash. You’ll see it land in your account, typically quarterly or annually, and can be a good way of earning a regular income without confining yourself to cash interest.
As for which one you should buy, that's a personal question that comes down to your investment goals. Would you rather snowball your earnings to increase their value over time - "growth investing" - or do you prefer the idea of a regular stipend from your investments - "income investing"?
If you need your investments to give you an income - this is often the case for those in retirement, for example - you would look at 'Inc' (income-producing) investments. Whereas if you don't want to take income or money out, just to invest as much as possible, this would lead you to look at the ‘Acc’ version of a fund.
Hope this helps!
