Yorkshire Fund Managers is issuing new shares in the British smaller technology ompanies venture capital trust (VCT) 2.
This VCT aims to deliver growth by investing in small UK technology companies in areas like software development, telecommunications healthcare and electronics. It will cover companies at all stages of development, from start-ups through to those that are well established, if they can show they have the potential to grow within the next five to seven years.
Technology is felt to be a growth sector because it has an important role in producing products and services which help to make other companies more efficient. Companies may use technology to give them the edge over competitors, so there is always demand for developments in this field.
Although this VCT diversifies the risk over companies at different stages of development, it is more risky than some VCTs because it is taking a gamble on growing companies within one volatile sector.
On the positive side, it could find companies that survive in difficult conditions and then make profits for investors when share prices recover. However, many small companies in this field could struggle and some investors may be wary of high risk, even though there may be some good buying opportunities around.