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You are here: Split Capital Investment Trust Guide

Split Capital Investment Trust Guide



Split Capital Investment Trusts
A Split Capital Trust, like any conventional Investment Trust, can be described as a closed ended collective investment fund. Basically, investors' money is pooled together from the sale of a fixed number of shares a trust issues when it launches. The money is then used to buy stocks and shares in other companies to create an underlying portfolio of assets. The shares of a trust are traded on the Stock Exchange, meaning that supply and demand determines price and not the value of the underlying assets, although one influences the other.

In most cases, a traditional Investment Trust has an unlimited life and issues one type of share known as an ordinary share. This is where the similarity ends as a Split Capital Trust has a much more complicated structure. Splits can issue more than one class of share, giving the investor the choice of higher than usual income or higher than usual capital growth within the same trust. Most Splits have a limited life; the wind-up date of the trust is set at launch. The life of a Split Capital Trust is usually between five and ten years, ideal for those who already have a set investment period in mind.
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