The long-term case for buying funds of zeros

Over the last few months we have seen a huge change in the way that the market perceives zero dividend preference (ZDP) shares. This has resulted in a period of unprecedented volatility, with prices of those with high levels of bank debt and cross shareholdings coming under enormous pressure. The change in perception of the value of zeros has revolved around the change in the way many newer split capital investment trusts are structured. For many years, split capital investment trusts were structured without bank debt, or at least with relatively low levels of bank debt. The ZDP shares pr...