What is the difference between capital and accumulation units

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Please tick the box if you would like to stay informed by email. There are two types of units: Accumulation units and annuity units. The value of each type of unit is subject to periodic adjustments based upon the performance of the underlying common stock portfolio. Prior to retirement, the purchaser of a variable annuity pays an agreed-upon periodic premium amount.

When these periodic premiums are paid, the purchaser is credited with a number of accumulation units. The actual number of units is determined by the current value of one unit relative to the amount of premiums paid.

The value of an accumulation unit typically is a function of the after-tax interest earned, dividends received and capital gains or losses incurred, less investment expenses associated with the insurer equity investment portfolio supporting the annuity. This is similar to the valuation of the unit values determined for shares in a mutual fund.

If you are unsure about the suitability of a particular investment or think that you need a personal recommendation, you should speak to a suitably qualified financial adviser. The information we provide in the ii Super 60 is an opinion provided by ii or one of its partners on whether to buy a specific investment. Please note that none of the opinions we provide is a personal recommendation.

Remember that each fund is unique and exposed to different levels of risk. While some are relatively low risk, others can be very risky and will only be appropriate for more sophisticated investors. There may be a fund manager charge, which is a percentage of the value of your investment. This can differ depending on the fund. We charge a monthly flat fee to cover the cost of our services, including the administration of your funds.

Top funds. Model portfolios. Quick Start Funds. Types of fund. Investment Trusts. Accumulation vs Income Funds. Accumulation vs income funds: which is better? How to invest in funds with ii. Income funds pay any profits directly to the investor as cash. Growth funds automatically reinvest any profits back into the fund. This helps the fund grow over time. Choosing between income or accumulation funds - it all depends on your needs The income share class is suited to those who want to draw an income, for instance those using their investments to help fund their retirement.

The power of compounding Whether you prefer to invest in funds, shares or simply passively invest in a stock market index, there is one thing that you should not underestimate: the power of compounding, achieved through investing for the long term. Accumulation versus income share class: a worked example To help explain the differences between the two share classes we have used the example of the Schroder Income fund, one of our Super 60 funds.

Differences between income and growth funds.