BFS Investments is launching an investment trust specialising in zero dividend preference shares.
The Zero Preference Growth Trust is a split capital investment trust, which will be capped at £60m of which half will come from bank debt.
The trust will have two share classes, zero dividend preference shares and growth shares. The zero shares will have an expected gross redemption yield of 6.75 per cent after five years.
The launch costs will be capped at 1 per cent, with an annual management charge of 0.25 per cent.
BFS' investment director Tony Reid says: “Activity in the split-capital sector has led to new zeros being created and a temporay over supply of stock.
“This has caused new issuers to offer zeros on redemption yields which represent a considerable premium over the equivalent dated gilt.”