James Carthew: there is a future for quality ‘zeros’
Split capital investment trust Jupiter Dividend & Growth (JDT) is approaching the end of its life. It was launched in December 2005 and is by far the oldest of the ‘splits’ that exist today. However, its articles of association say it must wind up on 30 November 2017 and its zero dividend preference shares (zeros) need to be repaid on that date, so it is time to say goodbye. Jupiter has arranged that Jupiter UK Growth (JUKG) will act as a rollover vehicle for those investors who want one.
Jupiter Dividend & Growth is also the last of the split capital companies to have a more complex structure than just ordinary shares and zeros. It has three share classes, common, ordinary income shares and zeros. The common shares have a fixed capital entitlement and are entitled to a share of its revenue reserves. The zeros get a fixed capital entitlement and the ordinary income shares get whatever is left over.
The AIC’s split capital sector doesn’t comprise every investment company that has more than one share class and this might call into question its usefulness. However….
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Investment Trust Insider on Zero Dividend Preference Shares