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Julian Gibbs

I have been asked which venture capital trust I would recommend for medium-risk investors to top up their pensions over the long term. The one I recommend is Close income and growth VCT.

Close Brothers has an outstanding record in the VCT market, with three out of the top six performers over five years.

This new trust is designed to be a longer-term investment and is ideal for those who wish to supplement their pension.

Forty per cent tax relief, tax-free dividends and capital gains mean that VCTs are now far more attractive than virtually any pension plan or unit trust and certainly much more attractive than a portfolio of blue chips.

This VCT will have a wide spread of investments. Forty-five per cent will be invested in lower-risk property-based investments, with a particular emphasis on public houses with freeholds or long leaseholds, where the VCT will have a first charge.

Thirty-five per cent will be invested in businesses with good growth potential, particularly in the healthcare and education sectors.

Ten per cent will be invested in new businesses generated out of Brunel University’s department of mechanical engineering, electronic and computer engineering. Brunel has already spun off successful companies such as Biocompatibles, Hanson Medical and Corak.

The balance of 10 per cent will be invested in the money markets.

The priority of the managers will be to generate a tax-free income flow and dividends as soon as possible. The objectives are to pay out at least 3p a share each year, which is equivalent to 5 per cent tax-free, and to make capital gains over the longer term.

This VCT must be one of the best long-term investments around and gives much better tax breaks than a pension fund.


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