VCT investment hits all time high . The Venture Capital Trusts sector has reported total funds under management of £2.896bn at 5 October 2013 - the highest level since VCTs were established in 1995. Figures released today by the Association of Investment Companies showed funds under management in the sector rose £19m in the first six months of 2013. Funds raised as a result of the issue of new shares including enhanced share buy backs amounted to £94m while £121m was returned to shareholders in the form of dividends, with a further £39m returned to shareholders through share buy backs including enhanced share buy backs. “VCTs continue to play a vital role in supporting SMEs facing a finance gap. We are seeing solid dividends amongst the established VCTs which, together with more consistent performance, reflect the sector’s increased maturity,” said Ian Sayers, director general of the AIC. VCTs are designed to encourage individuals to invest indirectly in a range of small higher-risk trading companies whose shares and securities are not listed on a recognised stock exchange and they offer several tax advantages to investors who use them. The biggest ten VCT managers continue to manage just under three quarters of the total VCT funds under management. Jason Hollands, managing director of Bestinvest, said he believed the VCT market is experiencing “something of a sweet spot” at the moment as managers are reporting that as a result of the UK recovery they are seeing strong pipelines of new investment opportunities. “As an investment scheme specifically targeted towards small, domestic companies, arguably VCTs are a purer way to play the recovery that a typical UK listed equity fund given the UK stock market is so international in nature,” said Hollands. “The recovery should also improve the prospects for an uptick in exits of portfolio companies, many of which have been held on to in VCTs for longer than expected as a result of the credit crisis. An acceleration in exits could signal an increase in VCT special dividends.” Hollands said the VCT market is also benefitting from buoyant investor demand with the upper rates of tax remaining high in the UK, decent-yielding investments in scarce supply and the impending reduction in the annual and lifetime pension allowance. And he added: “As a result more experienced and wealthier investors are turning to VCTs to supplement their core pension and ISA investments. While they are not a .... Read more: bit.ly/19WHKfB
Posted on: Sat, 02 Nov 2013 12:00:11 +0000
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