If you invest in a fund, you may have noticed some confusing letters after the fund name, such as C, T, I, A and P. Or it may be labeled Inc or Acc. What do these letters stand for and do they matter?
Acc or Inc?
This difference is more straightforward to explain. If you want to invest in a fund to produce an income, you should put your money into the Inc version. A fund that has the word ‘Inc’ after it will let you take income. If you put your money into the ‘Acc’ version, it stands for accumulation and it means that any income that the fund produces will be reinvested – so it will buy more units in the fund.
What are the different share classes in funds?
A fund can come in several different versions. Some of these differences are universal across all funds and some are unique to a particular fund. Here are two letters that generally have the same use across all funds:
- I: If a fund has an I after its name, it’s normally one that’s aimed at institutional investors (such as pension funds). That means it may have a high minimum investment amount – which could be very high at between £500,000 and £1 million. In return, the institutional investor would pay a lower ongoing fee.
SAVVY TIP: You may also be able to invest in I class shares if you don’t want to invest via an ISA, a junior ISA or the fund manager’s savings plan.
- R: An R means that the fund is aimed at retail investors (people like you and me). It may have a very low minimum investment amount (it could be as low as £50 if you are going to invest monthly). The trade-off is that the charges will generally be higher.
There are other letters that may have different meanings according to the fund that’s using them. The most common letters I’ve seen are: A, B, C, P, T, Y and Z. The different letters may denote different levels of charges or ways that you can buy into the fund.
- A shares may only be available to direct investors – namely when you contact the investment company direct and invest without going through an independent financial adviser or a platform. If you want to buy direct from the fund, there may be a minimum investment level.
- C shares may only be available via independent financial advisers or platforms.
- X shares may be old style shares that carried an exit charge that are no longer available to new investors. However, they may be available to existing investors (as in, if you’ve already invested in a fund by buying this class you may continue to invest in them).
- Y shares may only be available through investment platforms.
- Z shares may only be available through the largest investment platforms. They are likely to have negotiated a better deal on charges because they will/could sell so many of these funds.
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