OCTOPUS ASSET MANAGEMENT
Venture capital trust
Growth and income by investing in unquoted and Aim-listed companies
Lump sum £3,000
September 30, 2004
Tel: 0800 619 7977
The Eclipse venture capital trust (VCT) from Octopus Asset Management invests in unquoted companies and those listed on the Alternative investment market (Aim).
Allenbridge Tax Shelter Research director David Knight thinks this offer is well positioned to produce results over the long term. He says: “With the new tax breaks, there is likely to be a boom in VCT investment and Octopus is getting in early with this new generalist VCT. The potential size of the market - estimates range from £150m to the sky - could mean a surge in new products. But as in the last boom, not all of them will prosper.”
Knight says the generalist nature of this VCT is sensible as there is already a number of good quality Aim VCTs. He points out that the trust will invest in a few core sectors and the fund management team will have specialist experience in some of these. He adds: “Despite Octopus' status as a relative newcomer to the VCT scene, we believe that the management team has sufficient experience. In our opinion they have put forward a convincing case for investment with the potential to deliver above average performance.”
Looking at the negative aspects of the product Knight says: “Octopus does not have a track record with generalist VCTs. But it has so far appeared to manage its previous VCTs well and in Chris Allner, it has an experienced fund manager with a very good track record.”
Knight also feels the timing could be optimistic. He says: “The aim is to get ahead of the game but investors may take a while to catch on to tax-based investments this early in the year and to the new generous tax breaks launched in the budget. Octopus believes it should have no difficulty with deal flow but in spite of the fund manager's experience, new relationships with deal providers will need to be forged.”
Knight concludes that although this is currently the only new VCT on the market, more issues will follow shortly to compete with Eclipse and the many top-ups from established VCTs.
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average