Edinburgh Fund Managers has introduced a split capital investment trust that is aimed at investors wanting to combine a high level of income with the potential for capital growth.
The Edinburgh Leveraged income trust invests mainly in high yielding split capital investment trust shares, but it also invests 25 per cent of its portfolio in UK smaller companies.
There are three share classes – ordinary shares, zero dividend preference shares and convertible income shares. The zero dividend preference shares have a pre-determined redemption yield of nine per cent and the ordinary shares are geared through a bank loan. The convertible income shares are fixed interest securities and can be converted into ordinary shares in the future.
The range of share classes gives investors the benefit of taking a high level of income but not at the expense of capital growth. The recent fall in interest rates could mean that income-seeking investors who are used to building society accounts may consider investing in this trust.
Of Edinburgh fund management's 16 existing investment trusts, five have Standard & Poor's star rankings. Three trusts inca, UK tracker and smaller companies have S&P three star rankings. The Edinburgh dragon and Edinburgh investment trusts have S&P two star rankings as at February 23, 2001.