Zero future?

All this talk of raising capital gains tax is ominous news for zeros.

By ‘zeros’ I mean of course zero dividend preference shares – that class of investment trust shares that lost investors millions back in 2002 and were responsible for the biggest scandal to hit the industry.

The zeros have recently been experiencing something of a comeback – despite their dodgy history – thanks to the fact they are taxed as capital gains not income. A lot of the zero shares launched in the past year have been in response to private client wealth managers, who in turn were responding to pressure from their investors.

Now, it looks like the brief resurgence could be already thwarted. Analysts at Numis Securities said today a rise in CGT ‘appears negative’ for zero dividend preference shares – a view that was also expressed by analysts at Oriel last week.

Of course, there has to be an investment case for the zeros too – with some, such as those from Ecofin, attached to attractive, stable companies. It is early days – but it will be interesting to see how strong the demand for zeros is after the emergency Budget on 22 June.

The FT’s Money blog is a forum for the latest news and insights from the UK’s personal finance scene. Matthew Vincent, the editor of FT Money and his team of reporters will upload their views and insights on what’s happening in the industry and how this affects people’s finances.

This blog is no longer active but it remains open as an archive.

Sign up for our daily email
Follow on twitter

About our bloggers

Lucy Warwick-Ching is the FT’s new Money Online Editor and has been a UK Companies reporter covering tobacco, pubs and leisure companies as well as the deputy editor on House and Home.

Matthew Vincent is the FT’s Personal Finance Editor and was previously the editor of Investors Chronicle, where he also devised the award-winning online video The Market Programme, and produced the BBC-FT standalone magazine ‘How to be Better Off’. He presents the weekly FT Money Show audio podcast, and previously worked on the BBC TV programmes Short Change and Pound for Pound.

Alice Ross is deputy personal finance editor of FT Money. She specialises in pensions, investments and investment trusts. Alice joined FT Money in April 2008 - prior to that she was deputy editor at Money Management magazine.

Ellen Kelleher has been a personal finance reporter in the UK for close to four years. Before arriving in London, she worked in the FT's New York bureau where she covered the insurance sector.

Steve Lodge is a personal finance reporter on FT Money specialising in savings.

Josephine Cumbo has written about all aspects of personal finance but currently specialises in insurance. She also covered company news for Prior to working at the FT she was a news reporter for the ABC.

Tanya Powley is a personal finance reporter on FT Money specialising in mortgages and the housing market. Tanya joined FT Money in November 2009 after working in Australia covering personal finance for the Australian Financial Review and its sister magazine Asset. Prior to that, Tanya wrote about mortgages for UK trade newspaper Money Marketing.

Jonathan Eley is editor of Investors Chronicle, and has been with the title for ten years. Before that he worked for newswires and trade journals in London, New York and Hong Kong.