Rory Palmer, What Investment, 18 Jan 2022:
Near the end of last year, I was told that my shares in Henderson EuroTrust had been subdivided after the board announced a reorganisation of the company’s share capital.
As a relatively new investor, this was a first. I knew it was an option trusts could exercise, but I wanted to understand the rationale and the impact, if any, it may have on retail investors…
What Investment readers will be familiar with share splits as long-term trust holders, and last year eight investment companies, including Bankers, Pantheon International and Baillie Gifford European Growth conducted a share split.
Annabel Brodie-Smith, communications director of the Association of Investment Companies, said splits are usually done when the share price of an investment trust is high, implying that its strategy has been successful and there is increased demand…
Brodie-Smith gave the example of Allianz Technology Trust, managed by Walter Price. The share price was £26.80 when it announced a ten-for-one share split in May 2021.
This meant Allianz Technology Trust created 10 new shares for every existing share at a price of £2.86.
That said, investors should be aware that it takes the data providers up to 24 hours to process a share split which can affect the NAV, discount, and dividend…
According to QuotedData’s James Carthew, before the split the price of existing shares almost trebled over the last 10 years and the move was made to assist monthly savers and those who reinvest their dividends.
“The directors believe that the sub-division may also improve the liquidity in and marketability of the company’s shares, which would benefit all shareholders,” he said.
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