Fund 101 - Understanding fund classes
There are mainly two types of funds (so-called shares/ classes): (1) based on the distribution policy and (2) based on the fund currency. Funds based on distribution policy are generally divided into ‘Distribution/ Income’ and ‘Accumulation’, and that will usually come with the end of the fund name. Sometimes, an abbreviation of ‘Inc/ Dis’ or ‘Acc’ will be used if there’s not enough space for display.
If a ‘distribution’ class of fund receives dividends or interests from the holding stocks and bonds, the fund management company will decide when and how much to distribute to users; For ‘accumulation’ class of funds, the dividends income will be added to the current fund for re-investment. From the user perspective, the return of ‘Dis’ and ‘Acc’ class is more or less the same. Depending on the user’s choice – if one prefers to have a regular income, ‘Dis’ class is more preferable; if one is looking for long-term income, then ‘Acc’ class fits that purpose as that creates a compounding effect from re-investment.
On the other hand, funds based on currency are relatively more straightforward to understand. Most of the time you can see the fund class is denoted by a short-form of the currency name such as HKD or USD, which is the designated currency for net-asset-value calculation and fund dealing. To cater the users from different markets, some funds offer up to 6 currency classes.
ZA One has prepared both fund classes for you. Go have a look and pick the best fit.
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