View more on these topics

Split-caps in covenant risk

Split-capital investment trusts could be in danger of breaching their covenants if stockmarkets continue to plummet

With the sector already under pressure, analysts have warned that further market falls will increase split-cap gearing levels, in many cases sending them over their bank&#39s agreed limits.

But Christows head of investment trusts Nick Greenwood believes banks are likely to be lenient to trusts under the circumstances, giving them the chance to raise new money or sell off assets. He also believes the split market will be prepared to deal with any further market falls.

Greenwood says: “The split market has been under pressure for a while so they will have speeded up reaction time. I think the banks will be accommodating. It is in their interests to relax covenants.”

Hargreaves Lansdown director of equity investment Alan Durrant believes it is too early to take a view on the whole sector. He says: “It is much too dangerous to be generalist. There are some splits that are already quite below their banking governance and could go bust but there are quite a few which are still looking strong. To take a sector-wide view is too generalist.”

Many conventional investment trusts are also trading at three-year lows, with some analysts calling this week a strong buying opportunity.

Durrant says: “These are the times when people can make a lot of money. People are selling stocks without thinking whether they need to be. People are panic selling.”


Abbey National looks high

Abbey National – High income & growthType: Mini or maxi guaranteed Isa.Aim: Income or growth by investing in a Dublin-based company which tracks the Dow Jones Eurostoxx 50 index.Minimum-maximum investment: Lump sum £1,000-£7,000.Investment choice: Cenus Investments 25.Term: Five years.Guarantee: Providing that between November 17, 2006 and December 14, 2006 the index does not fall below […]

Manor fund offers 11% income

Structured product specialist Manor Park has introduced a fixed income and growth fund.The fund, open until October 24, offers investors either a fixed return of 35 per cent over three years or an annual return of 11 per cent a year, payable on either an annual or quarterly basis.All the initial capital will be returned […]

Davies says EU should follow FSA example on consultation

FSA chairman Howard Davies says the European Union should follow his example of extensive consultation with the financial services industry before introducing changes that affect the market.In a pointed statement, Davies says, unlike Europe, in its drive towards creating a single financial market, the FSA consults extensively before proposing any changes that affect the industry.He […]

IFAs&#39 loyalty in vain as Euro star Powe quits

Star European manager Rory Powe is under fire from disappointed IFAs after quitting Invesco Perpetual with his top-selling £2bn fund at a two-year low.Many IFAs urged clients to stay loyal to Powe over the past 18 months – despite a period of poor performance by his European growth fund – in the hope that he […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm