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Hargreaves Lansdown warns of VCT bandwagon

Fund firms could be shooting themselves in the foot by launching venture capital trusts on the back of generous new tax breaks aimed at boosting investment in the flagging sector, according to Hargreaves Lansdown.

Invesco Perpetual and Keydata are among a burgeoning number of groups launching VCTs which invest in Aim-listed companies as they seek to take advantage of the Government&#39s decision to boost tax incentives. Others thought to be preparing launches include Framlington, Liontrust and M&G, none of which has previously been in the sector.

The management of most of these VCTs is expected – as with Keydata and Invesco – to be handed to smaller companies managers with experience of investing in the Aim. But Hargreaves Lansdown says they could come unstuck as, unlike the managers&#39 funds – which allow them to choose when and how much to invest in Aim firms – the VCTs require them to be invested in the sector at all times.

HL also points out that if fewer firms float on the Aim, managers will be left scrabbling for decent companies for their investments. It says this could be a major problem as there would be too much money to invest in too few firms, causing prices to soar.

Investment manager Ben Yearsley says: “Many investors will be attracted to the new launches but I am not convinced. It is a bandwagon and I wonder if these groups, which need to protect their brands, should be launching into the market. It could be detrimental.”

Keydata head of communications Roddi Vaughan-Thomas says: “We have a genuine Aim manager who will be able to attract the deal flow and get good value.”


Wesleyan wins strength test as free assets rise

Free assets of with-profits companies rose from an average 4.7 per cent of total funds at the end of 2002 to 6.4 per cent last year under the new realistic reporting regime, according to research by consultantcy Ernst & Young. This is the first increase in free assets since 1999. The free assets of the […]

Tories plan to ease annuity uncertainty

Conservative Shadow Work and Pensions Secretary David Willetts is calling on the Government to issue gilts indexed to changes in longevity to ease risks faced by annuity providers. In a speech to thinktank Politiea last week, Willetts claimed the plan would boost annuity returns by relieving product providers of some the risk they face from […]

Abbey concludes review of Scot Prov and Scot Mut

Abbey has completed the review of its with-profits funds and says its closed Scottish Provident and Scottish Mutual funds need no further capital to comply with the FSA&#39s realistic reporting requirements. Abbey says the equity exposure in the funds will increase to around 35 per cent. The provider says just under half its with-profits policyholders&#39 […]

Brokers say social housing move will aid FTBs

Funding for 10,000 social housing units a year by 2007/08 is part of a housing budget for England of £1.3bn a year announced by Chancellor Gordon Brown in the spending review this week. The news has been welcomed by brokers who say the move will help first-time buyers and lead to a wave of innovative […]

Who cares?

By Tracey Dickson, marketing consultant There are almost 7 million carers in the UK – that’s around 10 per cent of the population who provide unpaid care for a disabled, seriously ill or older loved one.1 But according to a report from the charity Carers UK, 20 per cent of people providing 50 hours or more of care […]


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