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Demand for venture capital trusts isstarting to soar.Sales have topped £160m, having more than doubled over the last two months.

There are over 30 VCT promoters and managers vying for investors’ money.The gulf between the best and worst-performing VCTs is wide so investors need to be careful.

Pennine Aim VCT 5 merits serious consideration. The management team of three includes Michael Cunninghama director of Rathbone, who has 20 years’ investment experience and can be viewed as the “grandfather” of Aim VCTs. Rathbone has a relatively good VCT track record. Previous issues of this trust have all outperformed the Aim index since launch.

Cunningham’s value style of investment should lead to a lower-risk profile than with some other Aim VCTs. Coupled with the intention to return 30p in cash to shareholders after three years, the trust may appeal to more risk-averse investors.

This approach means that 30 per cent will be held in cash to fund the tender offer in three years’ time. Once this tender has been implemented, the VCT should be almost 100 per cent invested in Aim stocks. It will seek to establish a broad spread of investments by industry sector and by stage of development.

The VCT is seeking to raise £30m, having managed to attract £5m so far. Given the quality of management, the trust stands a good chance of achieving this. This is one of the more sensible VCT choices and a good candidate for Aim exposure in a diversified VCT portfolio.

Justin Modray is head of marketing at Bestinvest


Aitc chief godfrey urges trust boards to use the treasury

The Association of Investment Trust Companies has called for more trust boards to use treasury shares. Director-general Daniel Godfrey has made a plea to the boards of investment trust companies in a bid to get them to consider buying back shares and holding them “in treasury” to be sold back at a later date. It […]


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