View more on these topics

Julian Gibbs

The VCT season has started early this year and is now in full swing.

Nearly all VCTs are a much safer investment than investing in individual shares and, if the tax breaks are taken into account, are also one of the best investments available today. This is for three main reasons.

First, investments do not have to be made into qualifying smaller company investments for the first three years.

This gives the manager time to choose carefully companies with prospects. In the meantime they can invest in gilts or in other equities effectively at a huge discount in the guise of tax reliefs.

Secondly, smaller companies have fallen much more heavily recently than the market as a whole, especially Aim-listed companies, and are now excellent value.

Thirdly, they are an ideal long-term investment for those higher rate taxpayers who have invested the maximum they can into their pension schemes and into Isas because VCT dividends are tax-free and the real value of them is likely to work through well after five years.

For example, Venture and Development Capital Investment Trusts have outperformed UK Growth over 10 years by a huge amount. Of the VCTs open now, the ones that I like best are Northern 3 VCT and Unicorn AIM VCT, both of which have excellent smaller companies records.

An interesting newcomer is Electra Kingsway VCT, which has an excellent long-term record of investing in unquoted companies, while Aberdeen Growth Opportunities VCT has a top class new manager, who had an outstanding record at the Clydesdale Bank.

Investors should divide their money between several trusts so as to give a spread of risk.


Pinnacle cashplan opts for maturity

Pinnacle Insurance has introduced a healthcare cashplan aimed at the mature end of the age spectrum.The senior health cashback plan is available to anyone between the ages of 18 and 79, but the type of benefits it offers are geared towards older people. This is why it provides cash benefits towards the cost of hearing […]

Outside edge

It has been quite hilarious to witness the reaction to last week&#39s suggestion that the charging cap on stakeholder pension may be altered from 1 per cent. It has been remarkable to see providers get so excited that you would think such an approach would rem-ove them from the hole in which many find themselves.Do […]

Merrill Lynch HSBC reduces telephone trading charges

Merrill Lynch HSBC is reducing the level of its telephone trading charges on its direct investing service.Merrill Lynch HSBC clients can now trade online or over the telephone for a flat fee of £19.95 per trade for transactions of any size.Merrill Lynch HSBC UK managing director Victor Dodig says: “Whilst the trend towards investors trading […]

Axa Sun Life appoints two to its business development team

Axa Sun Life is appointing Nina Glass and Duncan Mosely to senior positions to its business development unit.Glass, who was formerly director of European partnerships with American Express Europe, joins as head of strategic partnerships.Mosely becomes head of partnership solutions, and was previously e-business operations director for Axa UK.Axa Sun Life director of business development […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment