The return that an asset achieves measured simply by looking at the appreciation or depreciation of the value (expressed as a percentage) of the asset over a period of time.

This is different from relative return which compares the return of the asset to a measure such as a benchmark.

For example: A UK equity fund generates a return of 8% over 1 year. It’s benchmark, the FTSE All Share Index returns 5% for the same period. The funds’ absolute return is 8%, whereas its relative return is 3%.

An accumulation unit is most often found in a unit trust. Holders of these units do not receive a dividend from their investment. Instead of paying out any income received, it reinvested it back into the accumulation unit, thereby boosting the unit price.

Under current UK tax laws, holders of accumulation may be liable for tax on the value of that reinvested income, even though it is not received. The exact position depends on the asset class and their individual circumstances.