Split Shares
A one-stop product doing double duty.
Preferred,
regular
income.
Fixed, quarterly dividends with potential for downside protection
Potential for
leveraged
growth.
Monthly dividends plus leveraged participation in the performance of the underlying portfolio
Meet Colin.
A successful investment advisor — much like you.
Like Colin, you meet with clients having a range of investment goals.
Two very familiar types are:
Can one investment vehicle deliver
what both clients seek?
It’s known as
Split Shares.
Made for people who value unique portfolio solutions.
Split Shares deliver two classes of shares that can be “split” (separately allocated) to your clients to provide:
- New sources of steady dividend income for your income-oriented client.
- A leveraged equity investment for your growth-oriented client.
What exactly are Split Shares?
Just what the name implies.
In simplest terms:
Split Shares are unique investment funds that typically invest in a pool of large-cap dividend-paying companies. They offer two share classes that can be ‘split’ to align with a client’s income or growth objectives.
Read more
Let’s meet two investors.
Sarah
She’s seeking income.
Her goals
- Minimizing portfolio risk
- Generating steady income
Colin suggests:
adding new sources of tax-efficient portfolio income with an allocation to large-cap preferred shares offering the potential for downside protection.
Eli
He’s seeking growth.
His goals
- Finding new ways to diversify his portfolio
- Growing his long-term assets
Colin suggests:
adding equity exposure with an allocation to a basket of large-cap shares that feature built-in leverage for greater potential total returns.
Eli
He’s seeking growth.
His goals
- Finding new ways to diversify his portfolio
- Growing his long-term assets
Colin suggests:
adding equity exposure with an allocation to a basket of large-cap shares that feature built-in leverage for greater potential total returns.
Colin allocates $20k of the Split Share Corp.
to his clients’ portfolios
He’s free to split the Preferred or Class A Shares any way he feels will best suit his clients’ goals.
Here’s how Colin divvies up his $20k Split Share investment
50%
Preferred Shares to Sarah
Who gets fixed, committed
dividend income.
50%
Class A Shares to Eli
Who gets monthly dividends plus leveraged participation in the performance of the underlying portfolio.
In the end...
Sarah
Sarah has an additional source of tax-efficient dividend income in her income sleeve that offers meaningful downside protection.
Colin
Colin has helped to diversify his clients’ portfolios.
Eli
Eli has additional leverage in his equity sleeve to enhance his potential total returns.
What are the risks of investing in Split Shares?
Like most investments, a Split Share Corp. presents unique risks. A few key ones include:
- Market Risk
- Class A Shares: These are highly sensitive to changes in the underlying asset value. If the asset value declines, these shares can lose value quickly, potentially down to zero.
- Preferred Shares: While less volatile, their price may still be affected by changes in the underlying assets or the broader market.
- Leverage Risk
- Split Share structures often include leverage, magnifying gains and losses. This can significantly increase the volatility of returns, especially for capital shares.
- Dividend Risk
- Class A Shares: Depend on dividend payouts from the underlying assets after meeting the obligations to preferred shareholders. If the underlying assets cut or eliminate dividends, capital shareholders might receive nothing.
- Preferred Shares: Expected to receive fixed dividends, but payments depend on the performance of the underlying assets. Poor performance may jeopardize these payments.
Before investing, carefully evaluate risk tolerance, the performance of the underlying assets, and the specific terms of the split-share structure. Consulting with a financial advisor is also recommended.
Split Share Corp Market.
Established. Growing. Proven.
30+ years
Split Share corporations have established themselves in Canada since the 1990s.
$18.8B+
Split Share Corp. market size
The rapidly growing market for Split Share corporations now exceeds $18.8 billion.1
1 Morningstar DBRS Split Share Funds Quarterly Report – Q1 2024
About Ninepoint Partners
Ninepoint Partners manages innovative investment solutions that offer investors the benefits of better diversification.
As a team, we have a long track record of innovation in developing unique investment strategies
We offer investment strategies that are uncorrelated to traditional asset classes
We provide strategies that add value to your client’s portfolio and help to differentiate your business
Have the Split Shares conversation with your clients today.
Discover more about Ninepoint Partners and our Offering.
The opinions, estimates and projections (“information”) contained within this report are solely those of Ninepoint Partners LP (“Ninepoint”) and are subject to change without notice. Ninepoint makes every effort to ensure that the information has been derived from sources believed to be reliable and accurate. However, Ninepoint assumes no responsibility for any losses or damages, whether direct or indirect, which arise out of the use of this information. Ninepoint is not under any obligation to update or keep current the information contained herein. The information should not be regarded by recipients as a substitute for the exercise of their own judgment. Please contact your own personal advisor on your particular circumstances.
This document is for information purposes only and should not be relied upon as investment advice. We strongly recommend that you consult your investment professional for a comprehensive review of your personal financial situation before undertaking any investment strategy. Information herein is subject to change without notice and Ninepoint is not responsible for any inaccuracies or to update this information. Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any investment funds managed by Ninepoint Partners LP. These views are not to be considered as investment advice nor should they be considered a recommendation to buy or sell.
Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any investment funds managed by Ninepoint Partners LP. These views are not to be considered as investment advice nor should they be considered a recommendation to buy or sell.
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