The Unicorn Aim VCT II is a venture capital trust which will adopt the same investment strategy as Unicorn's first Aim VCT, established in 2001.
Around 50 per cent of the proceeds of this share issue will go into cash to protect the capital. The other 50 per cent will be split equally Unicorn's free spirit, mastertrust, UK income and UK smaller companies funds to provide short-term returns to investors until suitable Aim investments are found. Between 10 and 20 per cent will remain in the Oeics, while 10 per cent will remain in cash to aid liquidity.
Unicorn chief executive and chief investment officer Peter Webb will be responsible for the VCT. He has over 16 years' experience in UK smaller companies and has managed Unicorn's eaglet investment trust since 1993. Sean O'Flanagan, who joined Unicorn in 2002, will co-manage the VCT alongside Webb.
As a specialist in UK smaller companies, Unicorn's team knows its way around the Aim market but many other VCT managers are looking to raise money on the back of the recent Finance Act, which doubled income tax relief to 40 per cent for the next two years.
IFA Allenbridge notes that Unicorn's strategy of initially investing in cash and Oeics has paid off in the case of the original VCT, which has provided significant dividends to shareholders. But the drawback is this strategy exposes the VCT to the broader risks of market movements.
According to Standard & Poor's, which has no data for the original Aim VCT, Unicorn's Oeic track record is mixed. The free spirit and UK smaller companies funds are bottom quartile while the mastertrust fund is top quartile based on £1,000 invested on a bid-to-bid basis with net income reinvested over one year to October 25, 2004. S&P has no data for the UK income fund.