An investment fund with distribution units may be the right choice if you need extra income from your investments on a regular basis, while accumulation units may be better suited for your needs if you are investing for a long-term goal such as retirement. The value of distribution shares may rise in value over time, but the increase will probably not match the rapid growth experienced by an equivalent investment in accumulation shares, since distributions decrease the fund’s assets, and thus, its unit price.
As a rule, the reinvestment of earnings with accumulation units is free of charge and occurs automatically. By contrast, if you first had the earnings credited or paid out as you would with distribution units and then reinvested that amount in additional units in the fund, you might pay a sales charge of several percent. Depending on the laws of your country of residence, the tax treatment of distribution and accumulation shares may be different, and you should carefully consider this with your financial advisor.