MARGETTS FUND MANAGEMENT
GERRY ANDERSON PRODUCTIONS
Aim: Growth by investing in a new television series of Captain Scarlet
Minimum investment: Lump sum £25,000
Opening/closing date: March 7, 2003/May 29, 2003
Charges: Initial 5.5%, annual up to 1.5%
Commission: Initial 3%, renewal 0.25%
Tel: 0121 236 2380
The panel: Ian Millward, Marketing director, RJ Temple,
Jamie Hutchin, Private client adviser, Ward Consultancy,
Kerry Nelson, Director of financial services, Onevoice
Investment philosophy 6.4
Past performance 7.0
Company's reputation 7.3
Product literature 6.7
Gerry Anderson Productions is an enterprise investment scheme (EIS) that aims to create a new version of the cult television series Captain Scarlet.
Discussing how the EIS fits into the market Millward says: “EISs are very specialist investments. They have wonderful tax breaks but these are only there to encourage investors to back schemes they would otherwise regard as too risky.” Hutchin says: “It fits into the market for investors who are seeking to diversify their investment portfolios to obtain income tax relief and make an investment into a start-up scheme. It is a high-risk investment.”
Nelson says: “This is a very specialist investment that is suitable for the niche end of the investment market. Due to the tax relief, this would certainly suit the higher-rate taxpayer. However, while many investors are still nervous of stockmarket investments, this may be too high risk for a very restricted market.”
Highlighting the type of client the EIS could attract Nelson says: “It is suitable for those willing to take a high degree of risk for the potential of above average returns. It would be more beneficial for a higher-rate taxpayer due to income tax relief and exemption from capital gains if held for the requested period.”
Hutchin says: “Clients looking to invest in start-ups, obtain tax relief and accept a higher level of investment risk.” Millward says: “Very high-net-worth, who already have a well diversified portfolio and who are prepared to accept some high risk investment.”
Considering the product's marketing potential Millward says: “Captain Scarlet is a legend among certain generations. This is likely to mean the EIS will attract much greater interest than a typical EIS offering. However, it is a bit rich for our clients and is not something we could market.”
Nelson says: “This has very limited marketing opportunities and will definitely not appeal to the masses.” Hutchin says: “There are limited opportunities as this type of product is only suitable for specifically targeted investors.”
Identifying the main useful features and strong points out the EIS Hutchin says: “Gerry Anderson's track record in television production and the appeal of Captain Scarlet to both new and old television audiences.” Millward says: “Tax relief and capital gains tax breaks plus the Captain Scarlet and Gerry Anderson names.” Nelson says: “The main feature and key benefit of the product is the tax benefits of investing through an EIS, along with the potential success of Captain Scarlet.”
Examining the investment philosophy Nelson says: “Captain Scarlet has been a success in the past and I am sure it has an established cult following. However, it will also have to appeal to a new and younger audience to ensure its success.” Millward says: “The trailer included with the literature as a DVD was fantastic. It has a huge potential fan base world wide so, bearing in mind the risks, it could be a spectacular winner.” Hutchin thinks it is sound given the nature of the entertainment industry and inherent associated risk.
Turning to the disadvantages of the product Hutchin says: “It comes to the market at a time when several other EIS schemes have failed to obtain minimum funding from investors and difficult market conditions have meant investors have held back on commitments.” Nelson says: “The major risk is the market is very limited and the risk in the investment is high, as returns are not diversified. It also relies on shares in one company.”
Millward says: “Inevitably, there are lots of risks which clients may need to understand the film industry to appreciate. The £25,000 minimum investment will prohibit much of the genuine fan base from investing. They may not attract the minimum £5m, which I think is unlikely, and there is no market for the shares.”
Discussing the company's reputation, Millward says he has not heard of Margetts, which is the promoter of the EIS. Hutchin focuses his attention on the reputation of Gerry Anderson Productions and says it is a household name that has proved successful. He thinks its success in the television production arena could inspire confidence among investors. Nelson says the reputation of Gerry Anderson Productions is based on the individuals involved. She points out Gerry Anderson himself has tremendous knowledge of this area and feels his involvement in the original Captain Scarlet will be beneficial to the new series.
Looking at possible competitors for the product Hutchin says: “There is no real competition from other products as this a very specific product. The main competition will come from the EIS sector where fund raising has been poor.” Millward suggests conventional EISs or venture capital trusts but believes Captain Scarlet gives this EIS a stronger wow factor. Nelson says: “In the very tight parameters of this market, there is not a great deal of competition, especially as offers are only open for certain periods.”
Turning to charges Millward thinks they are fair and reasonable. Nelson says: “The charges are really at the top end of the scale, especially while there are so many discounts on other investments.” Hutchin feels they are a little excessive but points out that there is room for a discount if the adviser reduces commission.
Moving to commission Hutchin says: “It provides the adviser with the flexibility to rebate commission to clients. The commission is extremely fair when you consider products such as sale and lease back and film distribution limited partnerships provide between 1 per cent and 1.5 per cent initial commission and no renewal.” Millward thinks the commission is reasonable. Nelson thinks the commission is generally in line with other investments, although she feels the renewal is a little low.
Casting an eye over the product literature Millward finds the DVD superb but complains that the literature doesn't carry any genuine affection for the project. He regards the literature as typical and legalistic. Hutchin says: “The literature is well laid out and comprehensively covers all the risks and taxation issues for the scheme.” Nelson says: “The use of the image is eye-catching. The information is clear and presented in an uncomplicated manner. By nature, the information will not be easily understood by unsophisticated investors. It will be suitable for investment professionals and investors familiar with EISs.”
Summing up, Millward says: “I can't wait to see the real thing.”