Split capital investment companies

Investment companies can have one or more classes of share.

Investment companies which issue only one class of share are known as ‘conventional’ investment companies.

Companies that issue different classes of share to meet different investors’ needs are called split capital investment companies (splits).

The different classes of share have varying rights and entitlements within the company.

Some split shares aim to pay regular dividends for investors who want an income. Others aim to pay out only a capital amount at the end of the company’s life. Other splits may have a more complicated structure.

Splits provide gearing to their share classes through their capital structure, called ‘structural gearing’. This type of gearing is due to the order of priority and entitlements of the shares within the structure. Shares within the structure will have varying levels of risk.

Other kinds of collective investment vehicles can’t offer this split structure within one fund. Splits can be complex investment vehicles and investors need to ensure they fully understand the structure before investing.