Figures released today by the Association of Investment Companies (AIC) show that the VCT sector has total funds under management of £2.896bn at 5 October 2013, the highest level since VCTs were established in 1995.
Funds under management increased by £19m in the first six months of 2013. Funds raised as a result of the issue of new shares (including enhanced share buy backs) amounted to £94m, whilst £121m was returned to shareholders in the form of dividends, with a further £39m returned to shareholders through share buy backs (including enhanced share buy backs). The biggest ten VCT managers continue to manage just under three quarters of the total VCT funds under management.
Ian Sayers, Director General, Association of Investment Companies (AIC) said: “VCTs continue to play a vital role in supporting SMEs facing a finance gap. We are seeing solid dividends amongst the established VCTs which, together with more consistent performance, reflect the sector’s increased maturity.”
Figures released today by the Association of Investment Companies (AIC) show that the VCT sector has total funds under management of £2.896bn at 5 October 2013, the highest level since VCTs were established in 1995.
Investment firm Hargreaves Lansdown has suggested some VCTs which could be appropriate for better off investors though with the proviso that VCT managers vary in quality significantly.
Adrian Lowcock, senior investment manager at Hargreaves Lansdown says: “The record assets under management in VCTs are a testament to their success. It is no coincidence funds under management are concentrated to a small number of managers. Those with established, successful track records continue to attract funds year after year.
“For investors the attractions of participating in top-ups to existing VCTs, rather than backing brand new VCTs, are clear. Top-ups provide access to mature portfolios with the potential for early tax-free dividends. Brand new VCTs can take a number of years to become fully invested and mature.
“It is still early days for VCTs in the current tax year and many VCT managers have yet to begin fundraising. Below we have highlighted one fund that is currently open and two that are due to launch in the coming weeks”.
Northern 3 VCT (Currently open) – the team managing the Northern VCTs has established itself as among the best in the business. They take a relatively cautious approach, looking to invest in established, profitable companies with strong management. They seek to use their experience to help the business grow and take a hands-on approach, generally appointing a chairman to the investee company and taking a seat on the board. They began fundraising for their VCTs early this year and demand has been strong with Northern Venture Trust and Northern 2 VCT already at capacity. Northern 3 VCT is managed using the same approach and there is considerable overlap between the portfolios. This is a top-up into a mature, diversified portfolio and early dividends should be a possibility.
Maven VCTs top-up offer (Coming soon) – Maven is shortly expected to announce a top-up into its six ‘generalist’ VCTs. This will provide investors with access to a mature portfolio of over 50 private companies, diversified across a number of industry sectors. There is a bias towards oil & gas services companies, Maven’s area of expertise. The team’s disciplined, relatively conservative approach has contributed to a strong track record of paying regular dividends and I believe early dividends should be a distinct possibility from this offer.
Hargreave Hale AIM VCT 1 & 2 (Coming soon) – this will be a top-up into two established AIM VCTs which invest primarily in AIM-listed companies, or in companies about to list on AIM. Finding good-quality investments on AIM can be difficult. Giles Hargreave, principal manager of these VCTs, has an enviable track record in smaller company and AIM investing. Giles and his team are probably best known for running the Marlborough Special Situations and UK Micro Cap Growth funds, but the VCTs are managed using a similar philosophy. They invest the core of the portfolios in high-quality, profitable businesses with the potential for strong earnings growth. They aim to hold a selection of businesses diversified by industry sector and will make use of cash and fixed-interest investments if their outlook for stock markets is cautious.