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What are split capital trusts?

Traditional investment trusts offer just one class of share, in which investors receive income in the form of dividends and if the shares rise in price, capital growth. There are a number of trusts, called 'split capital' trusts, which offer a variety of share classes.

Some share classes might focus on paying a dividend. At the other end of the spectrum some might focus solely on capital growth and pay no income.

Split capital trusts are often launched with a fixed lifespan, at the end of which, all the underlying assets can be sold and proceeds paid out to each class of share in order of priority. The wind up is usually subject to a shareholder vote. You are therefore not guaranteed the trust will wind up or that you will get your proportion of assets when you expect.

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