Type: Venture capital trust
Aim: Growth by investing initially in money market funds and investment funds managed by Octopus, then in unquoted UK companies mainly in the environment, technology, media, telecommunications, consumer lifestyle and wellbeing sectors
Minimum investment: Lump sum £3,000
Closing date: April 5, 2010 for 09/10 tax year, April 30, 2010 for 10/11 tax year
Commission: Initial 2.5%, renewal 0.5%
Tel: 0800 316 2349
Titan VCT 4 is a venture capital trust that invests initially in money market funds and investment funds managed by Octopus, then in unquoted UK companies mainly in the environment, technology, media, telecommunications, consumer lifestyle and wellbeing sectors
Discussing the ways in which this product could be useful for IFAs and their clients, Truestone Asset Management technical consultant Ben Stevens says: “The Titan VCT is a solid generalist/private equity VCT with a proven track record. The VCT is backed up by an investor group made up of around 100 successful entrepreneurs, giving an added layer of due diligence.”
The members of the Octopus investor group are drawn from 26 industries. Around 64 per cent of them have led a business and 65 members are directly involved in companies in which they have invested.
Members of the group are involved in the early stages of Octopus’ research before it makes an investment. Investor group members with relevant industry experience often help with the initial due diligence.
Once Octopus has agreed investment terms with a company, the firm’s management team will be asked to present the investment opportunity to members of the investor group, who are entitled to invest alongside Octopus on the same terms. The presentations enable the investor group members to assess a company’s investment case
Stevens notes that the investor group has the ability to cast a wide net when searching for appropriate companies to invest in, as well as assisting these companies to expand and develop a business network.
“Titan VCT 4 concentrates on investing in post-start up companies with little or no profit, with a view to taking these companies to the next level. It potentially avoids the very high-risk companies.”
Stevens points out that the 30 per cent of the VCT’s non-VCT qualifying assets are invested in the Octopus UK smaller companies and Octopus absolute return funds. “Both funds are well managed and offer an element of diversification. As the absolute return fund is a long and short fund, there is a small element of downside protection,” he says.
Considering the less appealing aspects of the VCT, Stevens says: “Titan VCT 4 invests in the same companies as the investor group and therefore there is a possibility of a conflict of interests between the member of the investor group, the investor group as a whole and the Titan VCT.”
He says there are no direct competitors for Titan VCT 4, but adds that the nearest would be the Foresight 4 VCT and Proven growth & income.
Summing up, Stevens says that Titan should be well positioned to outperform its peers.
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average