Accumulation units

A fund offers two types of units of shares you can buy – accumulation or income.  The difference is in how they handle the income (i.e. the dividends or interest) the fund generates.

Accumulation units or shares reinvest the fund’s income the fund generates, while income units pay it out. This usually means that the price of accumulation units or shares will rise over time as more income is received and reinvested.

If you hold a fund in a SIPP or an ISA, any income and gains are free of tax. But if you hold a fund in a Dealing account, income and gains are taxable. It’s important to remember that this includes income from accumulation funds – even though you’re not paid it directly.

See also: income units Read about fund classes

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Popular terms

Alternative Investment Market (AIM)

The junior marketplace of the London Stock Exchange, acting as a way for small and medium-sized growth companies to access investors. There are weaker regulatory requirements for companies that want to list on the AIM compared to the Main Market, which can mean less protection for investors.

AJ Bell offers dealing within the AIM market via our investment platform.

Aquis Stock Exchange

An alternative junior marketplace to the Alternative Investment Market (AIM), offering a place for small and typically less mature companies to trade their shares. This is separate to and not owned by the London Stock Exchange.

Companies listed on the Aquis Stock Exchange tend to be at a very early stage of development with low levels of liquidity and little or no trading history, making them harder to buy or sell – and therefore a riskier investment.

AJ Bell offers dealing within the Aquis Stock Exchange via our investment platform.

Bond

A type of investment in which you lend money to a company or government. In return you get interest payments and repayment of the money you lent at the end of a specific term. The interest rate and term are set at the start of the investment.

Investing in bonds is generally considered safer than shares. But there are still risks, primarily default risk (i.e. the company or government becoming insolvent), inflation risk, and the risk that interest rates rise over time.

A bond issued by the UK government is also known as a gilt. You can buy bonds directly, as well as invest in funds that hold bonds.

See our bond offering Read more about bonds