Has an Investment Trust...

[csearle]

...ever gone bust?

If not, great, if so, how could this happen presuming the constituent companies haven't all gone bust at the same time?

Thanks,
Chris

[Alaric]

...ever gone bust?

If not, great, if so, how could this happen presuming the constituent companies haven't all gone bust at the same time?

Excessive borrowing could do when the debt exceeds asset value, particularly if the investments were holdings in other investment trusts with excessive borrowings.

https://en.wikipedia.org/wiki/Split_cap ... ment_trust

http://news.bbc.co.uk/1/hi/business/4465039.stm

it's within the lifetime of TMF, so there may be archive material there as well.

[Dod101]

I doubt that an investment trust would go bust in the normal sense. The definition of 'going bust' is surely that the liabilities exceed the assets. Most ITs limit the borrowings to a 'prudent' level but if the borrowings become imprudent and the assets suffer an unexpected drop in value then I suppose an IT could go bust.

Why not?

Alaric has just illustrated an issue where just that happened with interlocking shareholdings.

Dod

[Mike4]

...ever gone bust?

If not, great, if so, how could this happen presuming the constituent companies haven't all gone bust at the same time?

Thanks,
Chris

I can think of four ITs at serious risk of going bust.

These are the four I recently purchased shares in, obviously

[Urbandreamer]

Many investment companies have been wound up. Usually in an orderly fashion.

IT's have the advantage that they don't have to pay out on demand, so they can take their time selling stuff and returning cash.

Does that count as "going bust", possibly, or possibly not.

[77ss]

...ever gone bust?

If not, great, if so, how could this happen presuming the constituent companies haven't all gone bust at the same time?

Thanks,
Chris

Yes.

Check out the split capital investment trust crisis. About 2000-2002.

Aberdeen was a major culprit - by March 2002.....of the £25,000 that had been put into Aberdeen Asset Management's Leveraged Income Fund only £90 was left.

I wasn't actively investing at that time - phew! Just remember reading about it.

[Dod101]

I forgot to mention the split capital ITs that went bust. The second trust called Yeoman for one because I held it. Split capital trusts were a decent investment if properly run giving the investor choice between capital or income but for some reason they began buying into each other and the whole thing became a disaster. Thanks 77ss.

Dod

[LittleDorrit]

For those with time on their hands, the full story of the split capital crisis is recorded in detail here.
https://epdf.pub/the-split-capital-inve ... eries.html
By the end of 2002 the shares in 19 investment trusts had been suspended.

[BullDog]

I forgot to mention the split capital ITs that went bust. The second trust called Yeoman for one because I held it. Split capital trusts were a decent investment if properly run giving the investor choice between capital or income but for some reason they began buying into each other and the whole thing became a disaster. Thanks 77ss.

Dod

Even worse, the splits (zeroes mainly) were marketed to an unsophisticated buying community as low risk investments. When, as we all now know, they were nothing of the sort.

At the time, I did quite well out of a couple of split cap trusts. It was a shame the whole sub sector was trashed through band wagon jumping corporate greed.

[Dod101]

I forgot to mention the split capital ITs that went bust. The second trust called Yeoman for one because I held it. Split capital trusts were a decent investment if properly run giving the investor choice between capital or income but for some reason they began buying into each other and the whole thing became a disaster. Thanks 77ss.

Dod

Even worse, the splits (zeroes mainly) were marketed to an unsophisticated buying community as low risk investments. When, as we all now know, they were nothing of the sort.

At the time, I did quite well out of a couple of split cap trusts. It was a shame the whole sub sector was trashed through band wagon jumping corporate greed.

As a matter of fact, I think they were a low risk investment when run properly. The problem was that, led I think by Aberdeen as was they started buying into each other and it became the so called 'magic circle'. The original Yeoman did well for me. I held their Zero Dividend shares and as the gain was classified as a capital gain I got the profit tax free. I had others but I have forgotten the names now. The Second Yeoman got caught up in the magic circle and went bust.

Dod

[BullDog]

I forgot to mention the split capital ITs that went bust. The second trust called Yeoman for one because I held it. Split capital trusts were a decent investment if properly run giving the investor choice between capital or income but for some reason they began buying into each other and the whole thing became a disaster. Thanks 77ss.

Dod

Even worse, the splits (zeroes mainly) were marketed to an unsophisticated buying community as low risk investments. When, as we all now know, they were nothing of the sort.

At the time, I did quite well out of a couple of split cap trusts. It was a shame the whole sub sector was trashed through band wagon jumping corporate greed.

As a matter of fact, I think they were a low risk investment when run properly. The problem was that, led I think by Aberdeen as was they started buying into each other and it became the so called 'magic circle'. The original Yeoman did well for me. I held their Zero Dividend shares and as the gain was classified as a capital gain I got the profit tax free. I had others but I have forgotten the names now. The Second Yeoman got caught up in the magic circle and went bust.

Dod

I agree with you. I recall there was a bunch of charlatans out there called Whitechurch or something who were a real hard sell on splits at that period. They, amongst others no doubt, pumped up the debacle with the public aided and abetted by investment houses who should have darn well known better. Splits were a pretty useful vehicle for a number of purposes. A shame what happened to them.

[Dod101]

Even worse, the splits (zeroes mainly) were marketed to an unsophisticated buying community as low risk investments. When, as we all now know, they were nothing of the sort.

At the time, I did quite well out of a couple of split cap trusts. It was a shame the whole sub sector was trashed through band wagon jumping corporate greed.

As a matter of fact, I think they were a low risk investment when run properly. The problem was that, led I think by Aberdeen as was they started buying into each other and it became the so called 'magic circle'. The original Yeoman did well for me. I held their Zero Dividend shares and as the gain was classified as a capital gain I got the profit tax free. I had others but I have forgotten the names now. The Second Yeoman got caught up in the magic circle and went bust.

Dod

I agree with you. I recall there was a bunch of charlatans out there called Whitechurch or something who were a real hard sell on splits at that period. They, amongst others no doubt, pumped up the debacle with the public aided and abetted by investment houses who should have darn well known better. Splits were a pretty useful vehicle for a number of purposes. A shame what happened to them.

I think there are still a few split trusts around but I have not taken a look for a long time. Someone may come up with some current names.

Dod

[DavidM13]

For those with time on their hands, the full story of the split capital crisis is recorded in detail here.
https://epdf.pub/the-split-capital-inve ... eries.html
By the end of 2002 the shares in 19 investment trusts had been suspended.

From that link in the book you have the below. I worked for Fundamental Data at the time and designed that site! Good times!



"One of the most comprehensive and timely sources of such data is the ‘‘Splitsonline’’ site (www.splitsonline.co.uk) from Fundamental Data Ltd,which provides daily analysis of split capital investment trusts."

[DavidM13]

As a matter of fact, I think they were a low risk investment when run properly. The problem was that, led I think by Aberdeen as was they started buying into each other and it became the so called 'magic circle'. The original Yeoman did well for me. I held their Zero Dividend shares and as the gain was classified as a capital gain I got the profit tax free. I had others but I have forgotten the names now. The Second Yeoman got caught up in the magic circle and went bust.

Dod

I agree with you. I recall there was a bunch of charlatans out there called Whitechurch or something who were a real hard sell on splits at that period. They, amongst others no doubt, pumped up the debacle with the public aided and abetted by investment houses who should have darn well known better. Splits were a pretty useful vehicle for a number of purposes. A shame what happened to them.

I think there are still a few split trusts around but I have not taken a look for a long time. Someone may come up with some current names.

Dod

There are a few companies with ZDPs still. But they are not splits in the real, traditional sense. No Incs or Caps any more either. Full list of companes with ZDPs here.

https://www.theaic.co.uk/aic/find-compa ... -analytics

[Alaric]

I think there are still a few split trusts around but I have not taken a look for a long time. Someone may come up with some current names.

There aren't very man left and they all seem to have maturity dates in the near future. .

https://www.theaic.co.uk/aic/find-compa ... -analytics

[mc2fool]

There are a few companies with ZDPs still. But they are not splits in the real, traditional sense. No Incs or Caps any more either. Full list of companes with ZDPs here.

https://www.theaic.co.uk/aic/find-compa ... -analytics

Sorry to revive an old thread, but how do I navigate to the ZDP Analytics page on the AIC site? I went looking for it and I'm probably missing something that's right there and obvious but I couldn't find a way of getting to it and had to search this site to find your post here for the link to it....

[DavidM13]

There are a few companies with ZDPs still. But they are not splits in the real, traditional sense. No Incs or Caps any more either. Full list of companes with ZDPs here.

https://www.theaic.co.uk/aic/find-compa ... -analytics

Sorry to revive an old thread, but how do I navigate to the ZDP Analytics page on the AIC site? I went looking for it and I'm probably missing something that's right there and obvious but I couldn't find a way of getting to it and had to search this site to find your post here for the link to it....

Right near the bottom of the research tools section there is a block in the middle where you can access it https://www.theaic.co.uk/research-tools. The block is called "ZDP analytics" and is just above the sign up sheet on the page I mention above.

[mc2fool]

There are a few companies with ZDPs still. But they are not splits in the real, traditional sense. No Incs or Caps any more either. Full list of companes with ZDPs here.

https://www.theaic.co.uk/aic/find-compa ... -analytics

Sorry to revive an old thread, but how do I navigate to the ZDP Analytics page on the AIC site? I went looking for it and I'm probably missing something that's right there and obvious but I couldn't find a way of getting to it and had to search this site to find your post here for the link to it....

Right near the bottom of the research tools section there is a block in the middle where you can access it https://www.theaic.co.uk/research-tools. The block is called "ZDP analytics" and is just above the sign up sheet on the page I mention above.

Ah, ok, thanks. Not so obvious then ... it isn't obvious that clicking on "RESEARCH TOOLS" will get you a page showing more research tools than is presented by the menu that pops up when you move the mouse over "RESEARCH TOOLS"!

I was also confused (after following your zdp-analytics link) that the ZDP Analytics page says:

"You are here: Home » Compare investment Companies » ZDP Analytics"

which led me to carefully eyeballing, in vain of course, the whole of the Compare investment Companies page looking for a link to ZDP Analytics, as that's what the You are here implies.....