Published: Jan 11, 2022
Focus:
Growth Capital
Transcript
Bill Nixon: VCTs are now proving popular with investors in the UK for a wide range of different reasons. The product is now established. It’s been existence for more than 25 years. It is in effect an investment trust, which invests in younger companies but at the same time offers some really compelling tax breaks such as 30% on initial subscriptions, and also tax free dividends. Most VCTs have a dividend policy of 5% or more (of NAV per share), including the Maven VCTs.
VCTs as an asset class increased last year by 4% at a time when the FTSE main market declined by 10%. So all in all it’s a very interesting product as part of a an overall investment portfolio.
This year Maven has launched to new offers for existing VCTs. Maven VCT 3 and Maven VCT 4. So these two trusts have performed very well for a number of years, in fact over the last 12 years both trusts have delivered improvements in returns in 11 out of 12 years, so they are long term good performers.
We’ve been building large portfolios of private companies across a wide range of interesting and high growth sectors and we’ve also actively investing and increasing our exposure to AIM, which has performed very well in the last 12 months.
We are targeting some of the most interesting, high growth sectors available to investors today. Sectors such as software, cyber security, healthcare and data analytics, and fundamentally we believe that these companies will in the long term be attractive to a wide range of trade and private equity acquirers which will help drive returns for the VCTs and support a dividend programme for investors.
The capital raised from investors is being used to back some of the most exciting companies emerging in the UK today which helps drive employment, which helps drive growth and economic value, and many of these companies are exporting and becoming global leaders. So there is simply much more than investment returns. VCTs deliver a real win win for investors, as well as for the UK economy.
I think we’ve seen a greater interest in VCTs in recent years for two very distinct reasons. The first is performance based. Most VCTs, including the Maven VCTs, have now delivered year on year. Investors have enjoyed an uplift in total return. They’ve also enjoyed a healthy dividend flow. Clearly VCTs also offer 30% tax relief on initial subscriptions. The other factor that is prevalent is the reduction in pension relief and many investors now view VCTs as a replacement product in tandem with their pension investments and that means that investors are looking for alternative products and, in many cases, VCTs have filled that gap. [ends]
For more information about the Maven VCT Offers, which are open until 4 April 2022 for the 2021/22 tax year, click here.
Risk warning
VCT shares should be seen as a long-term investment. A VCT’s underlying investments will normally be in unlisted companies whose securities are not publicly traded and are therefore likely to be illiquid and carry substantially higher risk than investments in larger, listed companies. The value of VCT shares, and the level of income derived from them, may fall as well as rise and investors may not get back the money originally invested. Existing tax levels and reliefs may change and the value of reliefs depends on personal circumstances.
