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Quester bets on UK companies

Spendlove says: "The useful features include the small minimum £3,000 contribution level, the broader spread of investment sectors, unlike many VCTs that are almost 100 per cent biased towards technology, and the strong performance to date of Quester’s previous launches. There are also the usual tax benefits pertaining to VCTs, along with the fact that the quantity and quality of deal flow is excellent on Quester’s existing VCTs."

Storer says: "There is the past performance of earlier issues and the experience and expertise of the management team, as well as its stability. The fund has a clear focus and also has a minimum investment level of £3,000. This makes it accessible to first timers who don’t want to commit too much but who fancy a punt."

Weighing up the products downsides, Woodward says: "The main disadvantage may be that recent falls in quoted technology and healthcare stocks may have dampened investors appetites for these sectors and higher risk investments in them."

Milton says: "As usual, costs may be high and marketability in the first three years can be difficult. There is also no proven access route at the end either, at asset value."

Storer has more trouble putting his finger on a drawback to the product. He says: "I cannot see any specific disadvantage, although there is a potential disadvantage in the timing, due to the recent upheavals in new economy share prices."

Looking at the trusts’ investment philosophy, Spendlove says: "This is almost a thematically invested smaller companies fund. Quester’s existing VCTs hold a broad spread of reasonably diversified investments and clearly it is hoping to achieve this also with VCT4."

Storer says: "The investment philosophy seems very sensible. It focuses on new business in the new economy, but also invests across the whole range, from internet service providers to healthcare. Care is taken to involve the relevant expertise gathered from previous experience and/or academic background. There appear to be very close links between Quester and many of the businesses it buys into."

Milton mentions that the investment philosophy is fine, but that less emphasis on e-technology might be prudent for the future, while Woodward says: "For investors who understand the risk profile of the type of company that Quester favours, the investment strategy is pretty good. However recent setbacks to some of the companies in the sectors that Quester looks to, means that it remains an open question if it will be as easy to get some of the investments to perform as well eventually."

The panel agree that Quester has built up a strong reputation in the VCT market.

Commenting on Quester’s past performance record, Spendlove says: "It’s reputation here is excellent. The FSA may remind us time and time again that "past performance is no guidance of future returns," but there is little doubt that the expertise and adeptness of the fund management team is of paramount importance when selecting or recommending this type of fund."

Storer however takes a different approach. He says: "Quester has obviously done extremely well for VCT investors and the statistics in isolation are impressive. But in this particular fund, more than any other, past performance is a dubious guide to future success. There are no benchmarks, close competitors or indices against which we can compare results. All I can say is that the overall Quester return of 70 per cent a year is a fair reward for the level of risk taken."

Turning to the product literature, Storer describes this as being very through and a surprisingly good read, while Milton says: "The literature is fine but, as inevitable with a new share issue, it is lengthy and complicated in parts."

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