Investing through a fund supermarket is all about flexibility. For example, you can choose to put your money directly in funds or invest in a more tax-efficient way through an ISA or SIPP. Similarly, you can make occasional lump-sum investments or set up a regular savings plan.
Another area where there is flexibility to help you achieve your goals is the 'share classes' that are available on some funds. These mean you have more than one way you can invest in these funds. There are three main types of share classes.
Most funds have an Accumulation (Acc) share class, which means any income generated from a fund is automatically invested back into it and reflected by an increase in the share price.
However, funds that are designed to pay you an income also have an Income (Inc) share class. It means the income can be paid out to you if you want, though you can also choose to reinvest it – in which case it will be used to buy more units, rather than increasing the share price.
The standard share class on bond funds is for interest to be paid net of UK basic-rate tax, which means the fund provider automatically deducts tax before any income is paid to you. (A similar thing happens on most bank and building society accounts that pay interest.)
However, the interest paid by bond and cash funds is tax free in an ISA and a SIPP, so the ISA or pension provider has to reclaim the tax for you and reinvest it back into your account. This can take several months. A gross share class is a quicker solution, as it pays you income free of UK tax (In both cases, a withholding tax levied on dividends will still apply and cannot be reclaimed). As a result, these share classes are only available when you invest in certain funds through our ISA or SIPP.
Please note, the value of tax savings and eligibility to invest in a SIPP or ISA will depend on personal circumstances. All tax rules may change in future. Please note funds held in a SIPP can not be accessed until you reach 55.
Fidelity's range of offshore funds can be held by investors around the world. By offering some of these funds in a range of currencies, investors can manage their exposure to changes in exchange rates. The main currency share classes we offer are sterling, US dollars and euros.
Please remember that the value of investments and any income from them can go down as well as up and you may get back less than you invested. For funds that invest in overseas markets, changes in currency exchange rates may affect the value of your investment.
Fidelity does not give advice. If you would like this type of help, please see a financial adviser.