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Spirit of adventure

NOBLE & COMPANYUniVen VCTType: Venture capital trustAim: Growth by investing in spin-out companies from UK universities and other early stage intellectual property-based companiesMinimum investment:Lump sum £2,000Closing date: April 4, 2005 for 2004/05 tax year, June 30, 2005 for 2005/06 tax yearCharges: Initial up to 5.5%,annual up to 3.5%Commission: Initial 3% or initial 2.25% plus renewal 0.375%Tel: 020 7763 2200The UniVen VCT is a venture capital trust that invests in university spin-out companies and other early-stage intellectual-property-based companies in the technology sector.

Michael Philips proprietor Michael Both feels that this VCT has the true spirit of adventure. He says: “It has the facility for the reinvestment of dividends for investors who are purely interested in capital growth. The low minimum investment of £2,000 makes it easier for a typical investor to diversify his or her VCT budget.”

Both likes the fact that the directors appear to have very relevant experience in the fields in which the company will be investing.

He says: “As a pure technology trust being launched after the technology bubble has fully deflated, shareholders can hope that the managers will have the pick of investments on favourable terms.”

Turning his attention to the potential drawbacks, Both says: “Considering the years of experience of Top Technology, the front-line managers of the VCT, the stated internal rate of return on a capital-employed basis for past ventures is good but not outstanding.”

He also thinks that there are a lot of layers of management fees for such a small company, which he fears is more likely to dilute the return to the shareholders than enhance it. However, in fairness to UniVen, he concedes that this is not an unusual situation.”

He says: “As with all venture capital trusts, the managers need an incentive. At 20 per cent of any excess above dividends of 7p per share after four years, what concerns me is that there is no concomitant requirement for the net asset value to be at least 100p. This potentially leaves shareholders’ capital dangerously exposed, especially since the value of holdings can fluctuate wildly.”

BROKER RATINGSSuitability to market: GoodInvestment strategy: GoodCharges: PoorAdviser remuneration: AverageOverall 6/10



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