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Julian Gibbs

I have often been asked what I consider to be the safest venture capital trust now raising money. In my opinion, Close Brothers Development VCT is the most secure because it invests in asset-backed investments such as freehold children&#39s nurseries and garden centres.

Forty-one per cent of its investments have a first charge over debtors and 47 per cent have a second mortgage over freehold or leasehold assets.

Most of its assets are invested in growth areas such as healthcare (26 per cent), leisure and retail (22 per cent) and education (10 per cent).

Those who invested three years ago have shown a profit on paper, taking into account 20 per cent tax relief, and have paid tax-free dividends each year, rising from 2.5 per cent in 1999 to 4.5 per cent in 2002.

Over the same period, the FTSE 100 has shown a fall of 27 per cent and the AIM index has fallen by 24 per cent, while other generalist VCTs launched in 1999/2000 have averaged a fall of 16 per cent.

The management is first class and Close Brothers&#39 other VCTs are also top performers. As capital gains can be distributed tax-free as dividends and because Close Brothers aims to raise the dividend each year, this VCT is an ideal pension supplement for those investors whose pension schemes are capped.

Two examples of the VCT&#39s successful investments include Careforce, which provides homecare services for the elderly with local authority funding. This company has made seven acquisitions to date, has a turnover of £7m and is strongly profitable. It aims to float later this year.

It also invests in Automotive Technik, which produces worldclass military vehicles.

The C-Shares now available in this VCT are an outstanding investment, especially for higher-rate taxpayers.

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