Ndubuisi Egwim explains accumulation funds reinvest dividends automatically while distribution funds pay them out as cash. For ISAs and pensions, accumulation is usually better. He outlines four criteria for picking funds, starting with tracking focus and cost: even small fees compound into major losses over decades.
Again, another thing that confuses people is accumulation versus distribution. This is actually more important. Most funds come in two versions. So there's accumulation and distribution. You might see ACC and DIST. Accumulation funds automatically reinvest your dividends. You don't see the money coming out. It quietly compounds in the background. Distribution funds pay out dividends as cash. Same companies in the basket, the same investment, just different treatment of income. For a doctor, for instance, investing inside ISAs and pensions for long-term growth, you might want to consider accumulation because it keeps things simple and you reinvest. So it helps compounding to happen quicker. Now, there are 4 things I look out for before I invest in a fund. I'll share them with you. Number 1, what does it track? Is it global or a country like US or UK? Is it a sector like technology or healthcare? Number 2, cost. It could be TER, Total Expense Ratio, or OCF, Ongoing Charges. So this cost can compound over the years and over the decades. It might look small, but cost matter.
