Supporters contend the risks are overstated and the sector offers something for everyone. These are not stereotypically polite British differences of opinion. Both sides are vehement in defending their positions. Like other closed-end funds, known as investment trusts in Britain, splits are listed companies, available to any investor with access to shares on the London Stock Exchange or, in some cases, in Dublin's offshore market. Unlike traditional funds, which have one class of stock, splits have at least two.
Traditional splits are fairly easy to understand.
The income shares get most of the dividends and interest earned on the investments the fund owns, while the capital shares reflect the growth in value of those holdings. For investors to get their money back, splits usually mature and are dissolved about a decade after they are created. New share classes have been introduced over the years. Modern split capital structures typically feature zero-dividend preference shares, known commonly as zeros, income shares and capital shares. Some recent trusts have invested in technology stocks as well as high yield bonds.