Glossary
Distributing fund
A fund that pays out a portion of returns in cash to unitholders instead of reinvesting them. Suits investors who want an ongoing cash flow from their savings.
What it is
Returns that are paid out
A distributing fund pays out part of its return in cash to unitholders, usually once a year. The money lands in your account instead of being reinvested in the fund. The investment strategy is exactly the same as in an accumulating fund. The only difference is how the return is handled. For those who live off their capital, or want to see a concrete cash flow, that can be a reason to choose the distributing share class.
- Amos Value E (Dist)
- Amos Value E (Dist) is our distributing share class. The same portfolio, the same management, and the same margin of safety as Amos Value A (Acc), but with a cash dividend.
- Ongoing cash flow
- The dividend provides a regular top-up without you having to sell units. Practical for anyone who wants to supplement their income.
- You decide what the money does
- A paid-out dividend can be spent, saved, or reinvested manually. If it is reinvested manually, the compounding effect is essentially the same as in an accumulating fund, where it happens automatically.
In practice
How the distributing share class works
The choice between distributing and accumulating is rarely about returns and more often about what the money is for. In the accumulating share class the return is reinvested automatically. In the distributing share class the return is paid out in cash, for example as a complement to a pension. Within an investment savings account (ISK) the choice does not affect the tax, since an ISK is taxed at a flat rate whether the dividend is paid out or reinvested.
“The same companies, the same earnings. Just a different way to take part in them.”
Common questions about distributing funds
Two share classes, one fund
Related concepts
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