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Octopus cuts risk with small firms VCT

Octopus Asset Management is seeking to build on the comparative fund-raising success of its bioscience venture capital trust with a new VCT investing in smaller companies.

Due to launch in mid-November, the Phoenix VCT will aim to provide income for relatively risk-averse investors looking to protect their capital by investing in cash-generative domestically focused UK small caps in the Alternative Investment Market.

The VCT will be managed by former Old Mutual fund manager Justin Jordan. It is seeking to raise £15m and will initially keep all funds in cash while investment opportunities are sought, enabling it to pay a dividend before money is committed.

Jordan says it will be a much lower-risk investment than the bioscience VCT, which raised £7.5m on its launch last October, as it will primarily target a broad range of established dividend-paying companies. These are likely to be in the support services and leisure and ent- ertainment sectors, which are among Aim&#39s biggest.

Commission is 2.25 per cent with 0.365 per cent trail. The 5 per cent initial charge will be reduced to 3 per cent until December 31.

Jordan says: “We believe Phoenix&#39s risk-averse remit is right for the climate. It is a product that will maximise tax breaks and appeal to people who want to preserve capital.”

Hargreaves Lansdown investment manager Ben Yearsley says: “Justin has a good track record and will look to make money from outperformance rather than management fees. It is an interesting offering but might struggle to raise money at present.”

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