By James Thorneley The trust's capital structure will consist of zero dividend preference shares, or...
By James Thorneley
The trust's capital structure will consist of zero dividend preference shares, ordinary shares and bank debt. The group is considering offering renewal to intermediaries. If this is the case it could be done in a similar way to the renewal offered by Framlington Second Dual trust and by the split cap launched earlier this year by Premier.
The rolled over Framlington split capital trust offers an annual trail fee on ordinary shares of 0.5% to intermediaries.
The fee is paid out of Framlington's management charge twice a year. By offering renewal it means IFAs are not restricted to buying the trust through a wrapper product, such as an Isa, to ensure they receive a trail fee.
The Jupiter trust will predominantly invest in UK equities and partly in shares from other split cap trusts.
It will be run by Anthony Nutt who manages two of the group's existing split caps, Jupiter Extra Income and Jupiter Enhanced Income.
The investment strategy and underlying portfolio of the trust will be similar to the existing £126m Jupiter Enhanced Income Trust.
It was launched earlier this year and its underlying portfolio consists of 68% UK equities and 32% cash and fixed interest holdings. The difference between this trust and the new one will be their respective target audiences.
The Enhanced Income trust's shareholder base is dominated by institutional investors, whereas the new trust will be specifically targeted at the retail market.
In the past, demand for shares in split cap trusts has come from institutions but there is a growing appetite for them among intermediaries and the public as the sub-sector offers a relatively high income.
The zero share class has looked particularly attractive with some shares offering gross redemption yields of 8.25%.
If, as expected, the low inflation and low interest rate environment continues there may be increased interest in the ordinary share class which offers income.
The group has not yet decided the level of yield on any of the share classes.
Current gross redemption yield on the average zero share class in the sector is between 7.5% and 8.25%. The average yield on ordinary shares is around 7%.
The group has experience in the sector with five split caps, holding total assets of around £515m.
At the close of business on
21 July the income shares of Jupiter Enhanced Income were trading at a discount to NAV of 8.2%, whereas the discount on the income shares of Jupiter Extra Income was 7.8%.
Due to leave 31 May
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