View more on these topics

Matrix keeps eye on technology

MATRIX MONEY MANAGEMENT

Foresight 2 VCT

Type:
Venture capital trust

Aim:
Growth by investing in unquoted technology companies in the UK

Minimum investment:
Lump sum 2,500

Closing date:
April 5, 2005

Charges:
Initial up to 5.5%,
annual 2%

Commission:
Initial 2.25%,
renewal 0.375%

Tel: 020 7292 0825

The Foresight 2 VCT is a venture capital trust investing in unquoted UK companies in the technology sector.

Arch Financial Planning managing director Arthur Childs points out that there are around 20 VCTs vying for attention and this number is expected to double by the end of the tax year. He says: “Only a handful of these are likely to provide substantial rewards for investors. This second technology VCT from Foresight is likely to be one of them.”

Childs says: “The original Foresight VCT is a good example of how clients can potentially benefit from investing in top performing VCTs provided they are left to mature. Someone who invested 10,000 at launch in 1997 now has an investment which has already returned tax-free dividends of around 16,500. They still have an asset worth a little over 8,000, which was the original cost to them net of tax relief.”

Childs thinks a key attraction of the approach taken by VCF, which manages the new VCT, is that it takes a lead role in the companies in which it invests and will often be the only outside investor. He says: “Investing in fast-growing unquoted technology-based companies in the UK is naturally high risk. However, many clients looking for rapid growth will feel more comfortable with this than putting their capital in the Far East or emerging markets. To counter the obvious risk Foresight will generally avoid start-up companies, concentrating instead on those at the development stage with a proven technological product looking to expand their market. The expectation is that as the UK economy begins to recover such companies will benefit significantly.”

Childs prefers the VCT’s focus on unquoted companies rather than Aim companies, which he predicts will become overpriced due to a large number of VCTs concentrating on that sector.

Consdering the drawbacks of the VCT Childs says: “I have no dislikes about the product itself and the marketing people have done a good job with the literature. My only concern is that if you are going to promote a technology VCT, particularly if you already have a highly successful one, it is not helpful to drop the technology label from its name. If it was done because it might put off some investors, I think those investors would have been better served by being put off in the first place.”

He believes competition will come from the Eclipse, Baronsmead and Oxford Technology 4 VCTs.

BROKER RATINGS:

Suitability to market: Good
Investment strategy: Good
Charges: Average
Commission: Average

Overall 9/10

Recommended

Mortgage Express unable to accept online business

Mortgage Express is unable to accept online applications for the next week or so. Mortgage Express warned brokers it may not be ready for M-Day due to the immensity of the task. Mortgage Express media relatins officer Daniela Conte says: “We have fully compliant KFIs ready but not our online service. We hope to have […]

China: growth defence or another debt-fuelled boom?

By Douglas Turnbull, Head of Chinese Equities at Neptune Following recent stimulus efforts from Beijing, Neptune’s Douglas Turnbull examines how the government’s long-term reform agenda can be balanced with supporting growth and addressing structural challenges, and the investment opportunities arising from this.Click here to read more Important information: Investment Risks Neptune funds may have a […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com