Matrix Securities has joined forces with Unicorn Asset Management to unveil the Unicorn Aim venture capital trust (VCT),
This VCT will follow a similar investment strategy to Unicorn's eaglet investment trust, which invests in a portfolio of quoted companies with a market capitalisation below £50m. However, it will differ from that trust by focusing on unquoted companies that are listed on the alternative investment market (AIm).
Matrix and Unicorn believe AIm offers good investment opportunities because it is under-researched by fund managers and may contain undervalued stocks as the index has fallen drastically over the past year. Figures from the London Stock Exchange show AIm fell from a record high of 2,924.93 points on March 3, 2000 to 820.50 points on September 28, 2001. This is close to the record low of 761.30 points on October 14, 1998.
However, the money initially raised through the VCT will not go into Aim-listed companies immediately. At least 50 per cent will be invested in cash, with the rest going in quoted UK smaller companies like those contained in the eaglet investment trust until suitable AIm-listed companies are found.
The tax-efficiency of this VCT could make it a hit with higher-rate tax payers or those looking for an alternative to an Isa, but investing in unquoted companies can be risky. The growth potential of these companies may not be realised and they could suffer setbacks due to unrealistic business plans.
According to Standard & Poor's, Unicorn Asset Management's eaglet investment trust is ranked 1 out of 27 trusts based on £1,000 invested on a mid-to-mid basis with net income reinvested over three years to October 1, 2001.