What do the letters in fund names mean and which version should I pick?

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Often when I go to buy a fund it seems like there’s many similar versions of the same one. The only thing that’s different is the string of letters after the name. What do these mean and does it matter which one I pick? 

Annie L

Paul Angell, AJ Bell Head of Investment Research, says:

Fund names are often full of jargon, which can quickly confuse when you’re looking at which one to buy. Different fund providers will also often have their own jargon, so even the experts can’t always figure out exactly how a fund differs from other versions by the same name.

 

But there are a few helpful things to look for to decode these names. Some of the verbiage included in the title indicates what the fund invests in or how it pays income.

For many investors it can be okay to just understand generally why the extra words and letters are there without doing a deep dive.

We’ll use two names from our Favourite funds list as examples to decode: Artemis SmartGARP Glbl Smlr Coms I Acc £ and Amundi Core UK Govt Bd ETF Dist. If I referred to those funds in conversation, I would just call them Artemis SmartGARP Global Smaller Companies and Amundi UK Government Bond ETF. But let’s break down what the rest of the words and lettering mean.

The helpful identifiers

Thankfully, fund names typically lead with some of the most important details, such as who the fund provider is and what market or markets the fund is invested in.

The first word or words in most fund names will be the title of the company providing the fund. For example, Artemis is the fund provider of the Artemis SmartGARP Global Smaller Companies fund, and Amundi is the fund provider of the Amundi UK Government Bond ETF.

The second part of the fund name usually refers to the investment area: ‘Glbl Smlr Coms’ refers to global smaller companies, and ‘Core UK Govt Bd’ means Core UK Government Bonds. The inclusion of ‘core’ just means that it is a fund managed with few thrills versus its benchmark index.

If a fund doesn’t have ‘core’ in the name, there’s no need to worry, it’s just a phrase that some fund providers use and others don’t. If you don’t know what the abbreviated words in a fund name mean, click on the product and there might be a more complete title there. If not, a simple Google search is often your best bet.

In our Artemis example above, the provider also decided to include the fund’s research method ‘SmartGARP’ towards the front of the fund name. Whilst this arguably confuses things further, as a business they’ve wanted to build familiarity with this specific approach that is used across a number of their funds.

Acc vs Inc vs Dist

Most funds will include this at the end of the name, and it’s very important to pick the correct one. This will tell you if any income paid out by the fund’s holdings is put into your account or reinvested into the fund itself automatically. Acc stands for accumulation, and here the money will be automatically reinvested into the fund. If your fund says ‘Inc’ (standing for income) or ‘Dist’ (standing for distribution), any income is paid into your account as cash. You’d usually take this latter option if you were looking for regular payments from your fund.

In the example of the Amundi Core UK Govt Bd ETF Dist, the ‘Dist’ at the end is your signal that it is a fund that pays out income, in this instance the coupons paid by the underlying bonds held in the fund.

GBP or USD?

Some, but not all, funds will clarify in the name what currency they trade in. When we look at the name ‘Artemis SmartGARP Glbl Smlr Coms I Acc £’, the ‘£’ sign is the signal that this fund is traded in sterling. Other funds will mark this by saying GBP at the end, and some won’t say anything. On the AJ Bell website, a fund name not clarifying a currency typically means it’s traded in sterling. If that fund covers a market outside the UK, that means that your investment will factor in not only the market movements, but how that market’s currency moves in relation to sterling.

Occasionally you will see a fund that is offered in US dollars. If you invest in this fund, you will have your money converted to dollars before it’s placed in the investment and then will be converted back to pounds when you withdraw your money. This is different than when you invest in a currency hedged fund, that will have some variation of ‘HDG’ in the name. This means that you get what the fund’s return would be in its original currency, without the factor of how sterling moves in relation to that currency.

When it comes to ETFs, on the AJ Bell platform, in almost all cases there will only be options traded in sterling. You can still find hedged versions if you want the return of your investments to only be exposed to the market, and not currency.

The nitty gritty: lettering

Lettering is the most confusing part of fund names, because they will mean different things depending on the fund provider. A fund’s exact share class is inferred by the, typically single, letter that is in the fund name. So in the case of ‘Artemis SmartGARP Glbl Smlr Coms I Acc £’, this is the ‘I’ share class.

This letter indicates the specific version of the fund that is being sold by the provider, with each letter carrying a different cost that depends on the type of investor being sold to (e.g. DIY or an institution), their size of investment and any established relationship the buyer has with the provider. For the AJ Bell platform, we typically distribute the cheapest available share classes available to DIY investors.

Note: sometimes, if there’s different currency options for a fund, there will be multiple share classes available. It’s worth checking the ongoing charge for these, because they can sometimes differ.

With all this said, it’s not worth getting too bogged down in the options when it comes to share classes, because your investment platform will likely do the work for you of finding the best option they have available.

The Favourite funds list can help

One perk of using the Favourite funds list to select your investments is we try to simplify the jargon of names for you. For example, we typically only include one share class version of a fund on our list to help reduce confusion. For income funds, we show the income paying share class, otherwise, we show the Acc share class that reinvests income into the fund, helping with the capital growth that most investors are looking for.

We also ensure that the share class option included is the best option available to you, inclusive of encouraging fund providers to provide the most affordable share classes possible.

Lastly, we try to simplify the names of the funds in the listings, so you don’t have to spend as much time decoding. On our Favourite fund list, Artemis SmartGARP Glbl Smlr Coms I Acc £ is listed more simply as Artemis SmartGARP Global Smaller Companies Acc, so you still get all the information that’s relevant to you in a clearer format.

Fund names aren’t as complicated as they seem on first glance. Once you know what to look for, you’ll be decoding them in no time.

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Paul Angell

Paul Angell: Head of Investment Research

Paul Angell is AJ Bell's Head of Investment Research. Paul began his investment career with a global investment bank in 2010, holding various roles across London and Hong Kong over the following years. In 2016...

These articles are for information purposes and should only be used as part of your investment research. They aren't offering financial advice, so please make sure you're comfortable with the risks before investing.