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You are here: Split Capital Investment Trust Guide

Split Capital Investment Trust Guide



Frequently Asked Questions
Who can invest?
Anyone aged 18 or over. When you invest in a Split Capital Trust you become a shareholder of the trust company. Your shares are traded on the London Stock Exchange and are subject to the same company law and regulations as any other UK company.
Remember to identify your investment needs before you invest in a particular share class. If you were not suited to very high risk, for example, it would be unwise to invest in Capital shares. Splits can be complex investments, if you are unsure about any investment decision consult an Independent Financial Advisor (IFA). It is also wise to check whether your chosen IFA is a member of a self-regulatory body such as the Personal Investment Authority (PIA).
How do I invest in a Split Capital Trust?
If you have made your investment decision and need no further help you can contact the Split Capital Trust direct or alternatively you can invest through a stockbroker. Other institutions that offer stockmarket dealing facilities include banks and building societies. There are also web-based stockbrokers that allow you to conduct all transactions online.

You can make a lump sum investment through a stockbroker. Most Investment Trusts offer savings schemes that give you the option of investing on a regular monthly basis or with a lump sum. Some savings plans may not invest in all share classes, so check the Key Feature documents before you sign up. For a fee, some Split Capital Trust saving schemes also offer an exchange of other shareholdings in quoted companies for shares in your chosen trust.

Those of you unable to make a decision on which trust or share class, to invest in should seek the professional and impartial advice of an IFA.
What charges will I have to pay?
If you choose to invest via a stockbroker you will have to pay dealing charges, which can vary. When dealing with the Split direct through a savings scheme, it is best if you refer to the Key Features document or the trust's web site (if it has one) for charges as they differ greatly from trust to trust. Some trusts charge an initial and annual fee.

As you are issued shares by investing in the trust you are subject to Stamp Duty, which is the government tax on all share purchases. It is normally 0.5% of your total investment. There is also Capital Gains Tax (CGT) to consider, but this only becomes an issue when your shares are sold. You will not have to pay tax if the total gains you make from all your saving in the tax year is within your annual CGT allowance.

Dividends from income shares are also taxed. In some cases you can reinvest these dividends which sometimes incur a 0.5% government stamp duty charge.
How do I monitor performance?
The daily prices of each share class and some basic information such as the Net Asset Value (the total assets of a share class minus all its liabilities, usually expressed on a per share basis) of a Split is published in financial papers such as the Financial Times and on web sites such as Trustnet.

Very few sources show detailed analytical data such as hurdle rates, cover and redemption values. Trustnet now publishes this data in comparative tables within the Investment Trust section under 'Split Capital FE Analytics'. The Association of Investment Companies (AIC) publishes monthly statistics on all share classes.
Do Split Capital Trusts have ISAs?
Many Splits have ISA wrappers. You may invest up to £7,000 into an Individual Savings Account in a tax year. Any profits made from an ISA including dividends are paid to the investor without being taxed (For more information on ISAs see the ISA Education Guide). Although the returns from a Splits ISA is tax free, you will usually have to pay stamp duty when buying or selling, as you are essentially still investing in shares. This charge may be included in the annual management fee. Contact the trust directly for a full explanation of the charges involved.
When can I sell??
Investment Trusts are generally seen as a medium to long term investment, but there is an added complexity to Split Capital Trusts due to the different share classes. For example, if you decide to sell your Zero shares before the trust's wind-up date, you would fail to realise their full return.

As the shares in a trust are purchased through the stockmarket, when you have made your investment you will not be able to cancel the investment if you change your mind. The shares would have to be sold at the current market price. If you invest in shares through an ISA, you have a seven day 'cooling off' period in which you can withdraw your investment.

You can sell your shares at any time through your stockbroker. Savings plans and ISAs usually need written confirmation of your withdrawal.
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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.

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