Permuto Capital: Deposit, deconstruct, derisk

Situation

Own a share of Microsoft and you're buying its dividend stream and betting on its capital appreciation in whatever ratio the market prices that day – roughly 16% dividend and 84% growth today. A dividend investor has to buy the asset value multiple to get an anemic yield; a growth investor has to accept the dividend, and its tax drag, to get the capital growth. Neither can adjust the mix. Beyond yield or buy-and-hold investors, tools for specialty investors are clumsy and expensive: leveraged exposure means margin debt or derivatives, and shorting a dividend payer means owing the lender every dividend paid for the life of the position. The expectation is that both assets will be held over the long term, and Chia gives you the option to hold those on-chain. This has the benefits of safer self-custody and more granularity in holding (actually own half a share), and it reduces the cost of administration. These savings can be passed on in the form of lower fees and costs.

What we built

Permuto Capital, a joint venture between 3V Capital Partners and Chia Network, built a Delaware Statutory Trust that holds underlying shares and issues two securities against them under separate CUSIPs: 100 Asset Certificates (the capital value exposure, priced at a discount to share price, which is where the natural leverage comes from) and 100 Dividend Certificates (the perpetual dividend right, retaining qualified dividend tax treatment and, with no interest-bearing debt involved, Sharia-compliant dividend exposure). A built-in create/redeem mechanism keeps the combined value of the two certificates tracking the underlying share price. Certificates trade on two rails at once: through ordinary brokerage accounts cleared by DTCC, and self-custodied peer-to-peer on Chia, 24 hours a day.

The single-stock trusts for Microsoft, Apple, and Broadcom are currently proceeding through SEC review, with a roadmap to extend the same deconstruction to more than 85 additional companies once that framework is in place.

Impact

Permuto's historical case study on PepsiCo, from November 2019 through April 2025, shows what the blended return was hiding. Held as an ordinary share with dividends reinvested, PEP returned 21%. Split into its parts, the picture changes completely. If your view as an investor was that growth of PEP would be limited but that the stock would return significant cash flows to investors in the form of dividends, the Permuto Trust Dividend Certificate would have been a much better way to invest.

The dividend stream was growing the entire time, it just wasn't visible as its own return until separated from the multiple contraction dragging on the growth side. Unbundling doesn't create a return out of nothing, it lets an investor underwrite the two drivers of a stock's performance separately.