What defines a split-capital investment trust?

What defines a split-capital investment trust?

• A. An investment company with multiple types of shares (ordinary and preference)
• B. A fund that invests in both equities and commodities
• C. A trust that splits profits quarterly
• D. A fund that uses leverage

Answer: (A)

Split-capital investment trusts are defined by issuing more than one class of share, each with its own rights to income and to the return of capital. This means the trust splits its capital into different slices, such as ordinary (equity) shares and preference-like (debt-style) shares, giving investors a choice between different risk and income profiles. Often there is a fixed life with a predetermined order of redemption for the classes. This structure—multiple share types within the same trust—is what distinguishes split-capital investment trusts from other funds.

Split-capital investment trusts are defined by issuing more than one class of share, each with its own rights to income and to the return of capital. This means the trust splits its capital into different slices, such as ordinary (equity) shares and preference-like (debt-style) shares, giving investors a choice between different risk and income profiles. Often there is a fixed life with a predetermined order of redemption for the classes. This structure—multiple share types within the same trust—is what distinguishes split-capital investment trusts from other funds.