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IFAs warned to diversify venture capital trust investment

IFAs are being warned about the dangers of failing to diversify VCT investments and ignoring performance.

VCT specialist Noble is urging IFAs to spread the risk of VCT investments across sectors in the same way they would with other funds. It also says advisers should consider the performance of each VCT and not just consider the tax breaks. VCTs benefit from a 40 per cent capital gains tax break for two years.

Noble Group director Patrick Booth-Clibborn believes that some IFAs are blinded by the tax breaks and he does not think that investment risk is being spread, with some IFAs putting all an individual client’s investment into one VCT.
He says: “The tax breaks are obviously an attraction but VCTs can perform very well in their own right. It is important that intermediaries properly understand the performance that each trust will have.

“If you spread out your VCT investment, you are a lot more diversified and open yourself to a lot more opportunities. It is a basic principle of investing and applies for VCTs as it does for other forms of investment.”

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