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Why hasn't fund income bought more units?

Investment | Property Helpful? 5

Asked by rameshchandra, submitted 03 March 2011.

Open Quote My daughter invested £1000 (via Bestinvest) in New Star UK Property (now called Henderson UK property) Fund in April 2006 and received 502 units in the fund. She opted for accumulated units. She sold this fund in February 2011 and reinvested the proceeds in to her existing Schroder Global Property Fund. What I cannot understand is that after nearly five years the total units were still 502. Where did all the income go? The income should have bought some more units.End Quote

Answered by Justin on 04 March 2011

The reason for the number of units not changing is that they were accumulation units, not income units. All this means is that the accumulation unit price would have increased to reflect any income distributions, rather than the income being used to buy extra units. There's nothing to worry about as your daughter will not have lost out in any way, if anything accumulation units are preferable when re-investing income as it avoids the possibility of having to pay any charges (albeit, rare these days) when the extra units are purchased.

You can read more about income and accumulation units on our unit trust page.


Please note this answer does not constitute a recommendation or financial advice and should not be relied upon when making specific investment or other financial decisions. You should always undertake your own research into whether a product or service is appropriate for your needs and, if necessary, use a qualified professional adviser.

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