Noble & Company is promoting the venture capital trust debut from Invesco Perpetual. The Invesco Perpetual Aim VCT will invest in the alternative investment market and will be managed by the team which already runs several smaller companies funds.
Nobles and Invesco Perpetual intend to raise up to £40m for the VCT, which will be managed by a team headed up by Andy Crossley. Crossley has been running smaller company portfolios for 16 years and has managed the Invesco Perpetual UK smaller companies growth fund and Invesco English and International trust since 199. He also runs the Invesco Techmark enterprise trust and Invesco Institutional UK smaller companies fund
Despite Invesco Perpetual's lack of experience in the VCT market, it is an experienced Aim investor and its network of contacts could be useful in finding suitable opportunities.
The investment team selects companies after thorough analysis which include meeting the management. The selection process is valuation orientated, with the actual share price constantly compared with the manger's view of its value. The focus will be on growing companies which are valued at a lower price than their growth potential indicates.
When fully invested, the portfolio will contain 65 companies - 80 per cent of these are likely to be Aim companies while the remainder will be Ofex listed and unquoted.
The Budget earlier this year, which boosted income tax relief to 40 per cent for the next two years, may make VCTs more attractive to investors in the short-term and Invesco Perpetual could benefit from this. Unlike some new entrants, Invesco Perpetual is a well-known name and is more likely to be able to compete with the well-established VCTs.
Smaller companies reflect what is going on in the domestic economy more strongly compared with larger companies that are susceptible to global influences. With the UK economy currently in good shape, investors may feel it is worth investing a small part of their portfolio in this VCT.
However, unquoted companies can be risky as they are often still developing. On the plus side, Aim companies tend to be more developed than pure unquoted companies and this could lower the risk slightly.