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Aberdeen rocks split-cap sector

The decision to suspend dividends on Aberdeen&#39s European technology & income trust could send the split-capital investment sector into turmoil.

The trust stopped dividend payments on its income shares last week after assets fell to £178m from £400m at its launch in March last year.

After subtracting the trust&#39s £164m of bank borrowings, the fund now has a value of around £14m.

The fund&#39s main investors, which include BFS&#39s income & growth and geared income trusts as well as several Aberdeen funds, are likely to take a knock in income, which will in turn hit net asset values. The board is considering early winding-up or reconstruction of the trust.

Christows head of investment trusts Nick Greenwood says the split-cap sector may be lucky enough to avoid disaster this time but the market is bound to see an increasing number of incidences like this.

He says: “Last week was not a surprise. The shares were yielding 61 per cent and anything that yields that is probably not going to be able to make the dividend payment.”

Aberdeen says the fund is mainly institutional and may not affect retail investors.


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