Alphabet soup: decoding fund names

Mon 03 Apr 2017

By Brian Dennehy

Access Level | public

Fund analysis



Let’s start at the beginning…

Normally, your fund should start with the name of the fund manager e.g. Liontrust manages the Liontrust UK Smaller Companies fund.  If your fund has initial letters, this just refers to the fund administrator – for example the “CF” in CF Seneca Diversified Growth B Acc refers to the administrator of the fund: Capita Financial.

You will then have the name of the fund.  In the former example – UK Smaller Companies – this is pretty self-explanatory.  For some funds, such as Absolute Return or multi-manager funds, the name often doesn't tell you enough about how the fund invests.

After the fund name, there is typically a single letter, anything from A to Z.  This denotes the share class of the fund, and each share class has different charges.

Because there is no industry standard, the letter (share class) with one fund might bear little or no relationship to another fund with the same letter.

To add to the confusion, on one platform the same fund might be available in different forms – say letters A, R, and I.  You just have to click through on each and check which is the cheapest.  Often, you may see “Inst”, which means the institutional share class has been made available to retail investors.  The Key Investor Information Document (KIID) – superficial but required reading – will be the best place to see this.

If you see the letter code on one platform, you will have no idea if there is also a version on another platform with lower charges.

Our two tips

  1. If there is an R designation this is likely expensive, with old-style charges (also called bundled charges).
  2. If there is an I designation this might well be cheapest (also called clean or unbundled charges).

What About Acc and Inc?

Acc means accumulation, where the dividends or interest from the underlying investments is automatically reinvested.

Inc means that the dividends are paid out.  The investor then has the choice to receive these or reinvest them and buy additional units.  You may also see Dist, which is short for Distribution and means the same thing.

After that you might see GR or Gross meaning that the interest is paid gross, for example with a bond fund.  If you see Net then this is being paid out net of tax.

Lastly if the fund is denominated in more than one currency you will see the currency specified: GBP, EUR, USD etc.

For funds in different currencies you may also see Hgd or Hdg or Hedge (or sometimes just H, not to be confused with an H share class).  This is an abbreviation of "Hedged" and means that the fund insulates the end investor from changes in foreign exchange rates.  So a weakening or strengthening currency has no direct impact on the returns an investor sees.  

The fund name tries to cram a lot of information into a short space.  This can make it difficult to pick the correct version that best suits your needs.  The only solution at the moment is a bit of work on your part to decipher the name!  But once you know what you are looking for it's less intimidating.



Fund analysis


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