Aberdeen Asset Managers
Aberdeen Growth Opportunities VCT
Aim: Growth by investing in smaller unquoted companies in the UK.
Minimum investment: £3,000.
Opening-closing date: September 27, 2001 – April 5, 2002.
Charges: Annual 2 per cent for the first year, 2.5 per cent thereafter.
Commission: Initial 3 per cent, renewal 0.5 per cent for investments of £500,000 or above.
Tel: 0845 3002830.
James Keen – Investment manager, Brooks Macdonald Gayer
Norman Wilson – Proprietor, Wilson Insurance Services
Michael Mycroft – Proprietor, Michael Harriman-Mycroft & Company
Broker Ratings (ave. marks out of 10):-
Investment philosophy: 7.7
Past performance: 7.7
Company's reputation: 8.0
Product literature: 6.0
Aberdeen Asset Managers has introduced the Aberdeen growth opportunities venture capital trust, investing in smaller unquoted UK companies.
Looking at how the trust fits into the market Mycroft says: “As the market stands at the moment, with the effects of terrorism and recession, there should be a long-term possibility to make capital growth which this package appears to be suited for.”
Keen says: “One of many VCTs with similar remits – small unquoted company investment in the UK.” Wilson has a different opinion: “An excellent opportunity with a low-entry level (£3,000) for adventurous investors. One of several VCT's being offered presently, giving investors ample choice.”
Moving on to the type of client the trust may be suitable for Keen lists: “High-risk clients who can invest over three years or more, clients with up to £100,000 of taxable gain that can be deferred via a VCT, higher-rate taxpayers who wished to take advantage of 20 per cent relief on income tax, clients wishing to gain exposure to unquoted UK small cap stocks.”
Wilson agrees that it would be suitable for investors prepared to accept a degree of risk and also willing to wait for returns to come through.
Mycroft says: “Not for widows and orphans, but more for a higher-rate taxpayer wishing to seek a tax shelter and prepared to take a risk.”
On the subject of the marketing opportunities the product will provide Wilson says: “Useful for promoting and strengthening IFA ties with accountants. Ideal opportunity to talk to clients who are higher-rate taxpayers.”
Mycroft says: “As the market will offer suitable buying opportunities, an experienced investor seeking a tax shelter will be definitely interested in this type of investment.”
When asked to consider the main useful features and strong points of the product Keen says: “All relevant tax relief of VCT products, co-investment with other Aberdeen VCT's, minimum of 30 companies – spread of risk, small maximum size of £30m gives manager greater flexibility.”
Mycroft lists: “Good management group with a proven track record, the product has come to market at a good time, an attractive tax shelter, good investment mix.”
Wilson points to the tax reliefs for qualifying investors, the management team and the growing reputation of Bill Nixon.
Turning to the investment philosophy of the trust Mycroft says: “It meets the needs of an investor wanting to take the opportunity to invest in companies with potential future capital growth.”
Keen feels the bottom up stock selection is based on the strength of the management and is vital and typical of a VCT small cap manager. He also states that the use of 30 companies spreads risk, but is still quite a concentrated selection.
Wilson says: “Like all investment houses they talk a good game, but only time will tell. They are adopting a proven philosophy – entrepreneurial management, marketable products and good business strategy. Stick to the plan and it should work.”