Splits: FTSE call options paying massive divis (JDT)

Hits since Feb 10th 2004, 9.20pm


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If you take a contrarian view that the market falls are overdone (as I do) and we are likely to see a bit of a rebound over the coming months/years, then some of the out of favour splits have some appeal. They are highly geared so their movement is exagerated with swings in the the market.

See spiltsoneline web site for further info http://www.splitsonline.co.uk/incomeres.asp?quasiflag=A

and here's a link to the summary info on a few of the ITs mentioned on the thread (added 20th Oct 2002), the link on the left hand side is to the AVVFN summary info, the link on the right hand side is to the relevant splitsonline pages

JDT http://www.funddata.com/Abpdf/A2002.pdf
MGB http://www.funddata.com/Abpdf/303.pdf
JEH http://www.funddata.com/Abpdf/89061.pdf
JFI http://www.funddata.com/Abpdf/BWYOO.pdf

I've recently bought a few Jupiter Income and growth (JDT), they seem to be active investors concentrating on divi paying FTSE 350 companies. They currently pay a 40% divi (they are highly geared), the company winds up in Nov 2005, the fund needs to grow around 5.6% per annum for shareholders of the ordinary shares (investing now) to get their capital back, if the fund grows less than 3.4% a year, shareholders get nowt, if the fund grows substantially more than 5.6% per year then (due to the high gearing) you are off to the races.

See figure below for JDT vs FTSE 350 and MGB vs FTSE 350 (added 12th Oct 2002) and JEH vs FTSE 350 and JFI vs Ftse 350 (added 20th Oct 2002), which gives an idea on how these splits move with the indicies

Any views?
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Since April 6th 2004, The chancellor has decided (in his infinite wisdom) to do away with the tax credit refund in self select ISAs, so as of April 6th 2004, it may well pay to look at split income shares that pay the divi gross (i.e. without the automatic deduction), these investment trusts will be domiciled abroad, for example, Guensey and Jersey. Rambutan has kindly provided a list of trusts paying gross divis which you will find here (added 25/04/04)
http://www.advfn.com/cmn/fbb/thread.php3?id=6292125

Finally a link to SirLurkalot's excellent thread on Zero's "Zeros offer 10-15% better returns than the market" (added 06/12/02)
http://www.advfn.com/cmn/fbb/thread.php3?id=2685972