What is a split capital income share?

The idea behind splits is that while their share classes invest in the same assets, they can offer different amounts of capital growth and income to investors. As the name indicates, zeros don’t pay dividends but offer a predetermined level of capital growth over a fixed period of time, often seven years.

What are split funds?

A split occurs when a mutual fund increases the number of shares outstanding while simultaneously decreasing the price per share by the same factor. Splits are much more common in individual stocks than in mutual funds, with the most common splits being 2:1 or 3:1.

What type of legal structure is an investment trust?

An Investment Trust is a company quoted on the Stock Exchange and all it does is manage a portfolio of investments. The manager has a finite fund which he manages in accordance with his mandate. This is a closed-end structure.

What is a hurdle rate in real estate?

A hurdle rate is the minimum rate of return on a project or investment required by a manager or investor. The hurdle rate describes the appropriate compensation for the level of risk present—riskier projects generally have higher hurdle rates than those with less risk.

What’s the difference between a split capital investment trust?

Split capital investment trusts are investment trusts with more than one type of share, such as zero dividend preference shares, income shares and capital shares.

What’s the hurdle rate for a split capital trust?

By 2018 its zeros had a hurdle rate of minus 20%. In other words the trust’s assets could crash by 20% a year for six years and still repay the zeros. That’s good news for the zeros and the ordinary shares whose hurdle rate was just 1.2%.

How is a split interest trust set up?

Split Interest trust is an irrevocable trust in which the income is first dispersed to the beneficiaries of the trust for a specified period of time and then the remainder of the trust is donated to a designated charity.

What are the different types of investment trusts?

Split Capital Investment Trusts. Most investment trusts issue only one type of share (ordinary shares) and have an unlimited life. Split capital investment trusts are investment trusts with more than one type of share, such as zero dividend preference shares, income shares and capital shares.