Ask Money: accumulation or income shares?

Patrick Connolly of Chase de Vere helps a reader with a query about share classes.

January 19, 2019

I have been checking my portfolio ready for the new year. I am 65 and currently reinvesting all my dividends. My largest holding is in Artemis Global Income shares. I wonder whether I would benefit by changing this holding from accumulation into income shares, as by doing so I would be purchasing extra shares twice a year instead of just adding dividends onto the current share price. Could you please advise me whether this would be prudent?
Stephen London, by email

Patrick Connolly at Chase de Vere replies: The Artemis Global Income fund is one we like. If you are planning to continue reinvesting dividends, you are better off staying with your current accumulation units.

If you own income units in this fund, you will receive dividend payments twice a year. If these are reinvested, new units are purchased. This is treated in the same way as purchasing units for the first time, so while Artemis won’t impose any charges, there is a dealing spread, which is currently 0.27%. With accumulation units, income is not distributed but retained in the fund to increase the unit price. However, because no additional units are bought, there is no spread charge. So while you will have more units with income units, they won’t be worth as much as the accumulation fund units and you will pay an additional charge for the distributions to be reinvested. 

If you need help with a tax, pension or financial planning problem, please email: moneyobserver.ed@moneyobserver.com

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