Invesco Perpetual to launch split-cap trust

Invesco Perpetual is launching a split-capital investment trust later this month, to be managed by Martin Walker.

The Invesco Perpetual Dual Return trust will be available at launch as an issue of units for 200p, which can be split into separate ‘income' and ‘capital' shares at any point - each separate share is worth 100p.

Walker currently manages approximately £1.5bn in the firm's Children's fund and UK Growth fund.

The Dual Return trust's income shares will aim to provide a 7% annual yield and will pay 100p of capital and any revenue reserve on the scheme's wind up after seven years, while the capital shares will aim to provide an annual yield of 3.5% with all assets above 100p returned on wind-up.

Its launch harks back to the split capital investment trusts, which were popular in the sixties, and aims to provide a straightforward way of separating returns between income and capital for shareholders with differing requirements and tax arrangements.

"Whilst Sipps and Isas are designed to protect against both income tax and capital gains tax, it may make sense to consider the inclusion of income shares only in one or both of these wrappers as all returns from these shares over the trust's seven year life will be in the form of income," Invesco Perpetual head of specialist funds Graeme Proudfoot says.

"The capital shares could then be held outside of the wrappers so any capital gains accruing could be mitigated by an investor's annual CGT allowance. Alternatively, holding units gives shareholders a conventional, ungeared exposure to our UK equities expertise within an investment trust structure over a seven year life."

While the fund manager will have the ability to invest in fixed interest securities, it is expected that the portfolio will be initially 100% invested in equities.

There will be an annual management charge (AMC) of 0.75% and an additional AMC of 0.4% for the first five years to cover the initial launch costs.