Split UK capital investment group or trusts were introduced about forty years ago. These trusts are like standard trusts, but with one difference: they two or more types of shares. This investment can provide income or capital growth.
Best Bond forThose looking for a little variation with their investment needs can benefit from this trust. If you are looking for a fixed period investment, you can benefit from getting a specified date for payout. Also, some share types may not be income related, hence there may be no income tax payable on them.
How does the Bond work?These trusts offer income, capital, or a combination of both, and the degree of risk can vary. The trusts follow a certain structure dependant on share type with regards to the payout and return of shares. High geared shares are usually invested for longer hence hold a higher risk but also the chance of a higher return. 'Zeros' are the lower risk shares, which offer no income throughout the investment, but do offer earlier repayment and a fixed return based on sufficient funds.
Expected ReturnsThe expected returns can depend on a number of factors, such as the type of shares, the amount invested, and the performance of shares.
Length of Investment & AccessSplits, or at least one of the share types in the split, have a fixed life span of around five or ten years. This is something you should determine before you invest in a split capital investment trust.
AdvantagesThere are a number of advantages to this sort of investment, and these include:
| What to look out for As with any type of investment, it is important to look into splits before you make any firm decision with regards to which products is best for your needs. You may benefit from advice from an independent advisor, who can provide you with expert information on a totally objective level. AlternativesIf you are looking into other investments, there are a number of different options available. You can opt for investments such as:
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