Trade-related investment measure
Trade-related investment measureAny policy applied to foreign direct investment that has an impact on international trade, such as an export requirement. The Uruguay Round included negotiations on TRIMs.
Underinvestment problemUnderinvestment problem
The mirror image of the asset substitution problem, in that stockholders refuse to invest in low-risk assets to avoid shifting wealth from themselves to debtholders.
Split capital investment trustSplit capital investment trust
An investment trust with a limited life, in which the equity capital is divided into two classes - income shares and capital shares.Holders of income shares receive the majority of the trust's income throughout its life and a specified capital amount on liquidationHolders of capital shares receive virtually no income during the trust's life but on liquidation receive all the assets after repayment of capital to holders of income shares. In other words they get the benefit of most of the capital growth.The raison d'etre of split capital investment trusts is that a single trust can accommodate the requirements of two types of investor in one fund, and provide better performance for both than they would be able to achieve if they invested in separate funds.It works like this:Ian Illingworth has £10,000 to invest and wants to get maximum income from it. He buys 'Income Shares' in the Split.Colin Casey has £10,000 to invest and wants to get maximum capital growth from it. He buys 'Capital Growth Shares' in the Split.The Split invests their pooled money and during the lifetime of the trust pays out all the income to Ian. At the end of the Split's life, when the capital value of the fund has risen to, say, £60,000, it pays Ian back his £10,000, and pays £50,000 to Colin.How have Ian and Colin benefited?Ian has benefited because for 7 years he has received the income on £20,000 even though he only invested £10,000.Colin has benefited because he has received the capital growth on £20,000 even though he only invested £10,000 and, being a higher-rate taxpayer, it has suited him very well not to have received any income on his £10,000 in that time.Basically, it is as if Ian said to Colin 'You have the capital growth on my £10,000' and Colin said to Ian 'Fine, I'll give you the income on my £10,000 in return.'There are many other classes of share within splits, and the thinking behind them gets progressively more complex. It is also important to note that Splits are geared investments (they can borrow money) which, depending on performance, can either be beneficial or detrimental to investors. If you are interested in what they have to offer it is essential to get specialist advice.
Mutually exclusive investment decisionsMutually exclusive investment decisions
Investment decisions in which the acceptance of a project precludes the acceptance of one or more alternative projects.
Investment managementInvestment management
The process of managing money. Also called portfolio management and money management.
Investment Company Institute (ICI)Investment Company Institute (ICI)
A national industry group of investment companies, including mutual funds, founded in 1940.
Further SuggestionsCapital investment
open ended investment company
Direct Foreign Investment
Tradepoint Investment Exchange
Regulated investment company
Undertakings for Collective Investment in Tradable Securities
Investment Company Act of 1940
Association of Investment Trust Companies
Bank Investment Contract (BIC)
return on investment
Guaranteed investment contract (GIC)
Investment Company with Variable Capital
Leveraged investment company
Personal Investment Authority
Net investment income per share
Alternative Investment Market
Registered investment adviser