View more on these topics

Smaller VCTs caught in low-investment circle

IFAs say the VCT market is now polarised between those VCTs with the power to thrive, and those caught in a vicious circle of low investment.

Chelsea Financial Services VCT specialist Matthew Woodbridge says those trusts that have yet to attract sufficient funds to be viable are caught in a vicious circle. Investors are backing trusts which have already achieved what he calls critical mass, but this is reducing the chances of smaller funds achieving it.

Hargreaves Lansdown in-vestment manager Ben Years-ley thinks there are some VCTs which should have been withdrawn but look as if they will keep going as the end of the tax year is so near.

He says VCTs which have raised 5m are workable, but those with only 3m to 4m will struggle to pay their managers and meet administrative costs.

The MTM China, Caven-dish, ProVen 3 C-share and Univen VCTs have all recently been withdrawn from the market after failing to raise enough to go forward, and have returned investors’ money. At the other end of the market, Baronsmead VCT’s C share offer closed early this month, having allotted shares worth 20m. The Artemis VCT 2 has also just closed, achieving its target of 40m in less than six months.

Yearsley says: “Investors in the smaller VCTs are trapped. I would hate to be in a 2m VCT because there is little incentive for the managers to perform. The Teather and Greenwood Aim VCT was an example of a VCT which only raised 2m, then came back for a top-up. But no one wanted to go into it because at the end of the day you would rather go into a 20m VCT than a 1m one.

“It has cost some firms a lot to pull their VCTs this year but at least they will not end up winding people up by trapping them in unsuccessful investments.”

Recommended

On your marks for Poat

I’m sure all you advisers who take an interest in technical matters will be only too aware that we are just a few days away from a new tax.

Axa limits new investments into property fund

Axa is limiting new investments into its life property fund following large flows of new money.After April 22, investors in Axa’s investment bond and premium select bond will be limited to investing 50 per cent of their money in the property fund.Axa head of investment marketing Mike Mumford says: “Our property fund has proved extremely […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com