Portfolio Dilemma: what’s the right share class?

An investor navigates a well-known minefield.

6th November 2026 12:44

by Dave Baxter from interactive investor

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Frank asks:Which share classes am I meant to buy when it comes to funds? Some seem to have different fees, but I’m not sure which options are best.

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As if it’s not hard enough choosing a fund already, investors then have something of a minefield to navigate in terms of share classes.

There are often several share classes to choose from when you search for a given fund – with little explanation about what’s best.

If we look at a once-extremely popular fund, searching for Fundsmith Equity I Acc (B41YBW7) on the ii site throws up five different share classes with confusing labels.

There’s I Acc, R Acc, R Inc, T Acc and T Inc. The share classes, importantly, don’t charge the same fee.

It’s not easy to understand what’s going on here.

But taking your time to pick the right share class, and to understand a few key terms, can put you in the right direction.

Check your fees

One simple approach when buying a fund can be to look at the different share classes and compare the fee they charge.

Fundsmith Equity’s fees by share class
Share class	Fee (%)
T Acc	1.05
T Inc	1.05
R Acc	1.55
R Inc	1.55
I Acc	0.95
I Inc	0.95

Note, for example, that Fundsmith Equity’s I Acc share class is listed as having a 0.95% annual fee, making it the cheapest option of those five.

The two R share classes look much more expensive, with fees of 1.55%.

It can make sense to first find the cheapest option you are allowed to buy – but a couple of other considerations also need weighing up.

Enter the jargon

The investment industry loves jargon and this becomes pretty apparent with share classes. The most important ones for DIY investors are arguably “accumulation/growth” and “distribution/income”.

The accumulation share classes will reinvest any dividends a fund receives, while the distribution option will pay it out to you.

Reinvesting dividends can make a big impact to your returns over the long term if you seek growth, meaning it’s important to pick the right option.

As with the Fundsmith example, accumulation share classes might be dubbed “Acc”, with income share classes dubbed “Inc”.

For those who feel curious about the letters put in front of share class names, it’s sometimes the case that the I stands for “institutional” and the R stands for “retail”.

The institutional share class is sometimes cheaper – and while it technically is only available to big, professional investors, individuals can often access it via an investment platform such as ii.

Having said that, it’s worth comparing the fees on different options rather than spending too much time trying to decipher the letters.

Other things to consider

Sometimes there will be share classes you can’t access.

There are reasons for this: some share classes may only have been available to early investors in the fund’s younger days, while some share classes can end up “soft closed”.

This is when a fund attempts to reduce inflows to manage its own size – a problem we have seen less in recent years.

Don’t forget that you can get currency-hedged classes on many exchange-traded funds (ETFs), but also on some actively managed funds too.

Such funds look to remove the effects currency movements will have on your returns – although this can include missing out on beneficial effects too.

Hedged share classes often come with higher fees than their “regular” counterparts, and in the ETF space a hedged share class will also be “distributing” rather than “accumulating”. It can therefore add a good deal of additional complexity to your portfolio.

Life is a bit simpler on this front when it comes to investment trusts, given that you normally only have one form of share to buy.

But there are still a few quirks here: note that Seraphim Space Investment Trust Ord (LSE:SSIT) fans now have the choice of either buying the ordinary shares or the C shares, to give one example.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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