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Framlington aims to do it again

Framlington has estbalished the Framlington Aim VCT 2, a venture capital trust aiming for growth by investing mainly in the Aim market.

The VCT will be similar to the first Framlington Aim VCT, which was established in 2004. The manager can also invest in companies traded on Ofex and unquoted companies, but at the moment the amounts are not expected to be significant. Money awaiting investment in qualifying Aim companies will be invested in cash, gilts, Aim investments that are not necessarily qualifying and unit trusts managed by Framlington.?

The VCT will be managed by Brian Watson, who has over 27 years’ investment experience, with a particular focus on smaller companies. He is the lead manager of the first VCT and has managed the Framlington innovative growth trust for the past 15 years. The trust holds stocks listed on the FTSE Small Cap and FTSE Fledgling indices as well as Aim.??Watson will be supported by Framlington’s UK team, which includes Roger Whiteoak, manager of the Framlington UK smaller companies unit trust which can invest in Aim companies.??

Watson, Whiteoak and the rest of the team will look for growth at a reasonable price, the quality of management, the company’s financial position, the industry it operates in and its competitive position.??Due to its experience in managing smaller company portfolios, Framlington has built relationships with a network of brokers and analysts from investment banks and smaller regional broking houses. These contacts will provide a source of ideas, further contacts and meetings.??
While the experience of the investment team should work in its favour, this VCT will face a lot of competititon from C share issues and top-ups from established Aim VCTs such as Keydata Aim VCT, plus the new breed such as the Close IHT AIM Pennine Aim VCT 6, which have options for people concerned about inheritance tax.

The advantage of a top-up will be that investors can access an existing Aim portfolio immediately, while for a C share issue investors have access to the existing portfolio once shares are converted into ordinaru shares. However, a new VCT must be built from scratch and with a number of VCTs looking for similar investment opportunities, it may take a while to build up a strong portfolio of qualifying investments.

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