VCT update - what's opening?

We have made it to our Great British summer – the birds are singing, the sun is shining (for now...) and VCTs are slowly coming out of hibernation to launch top-up offers for investors wishing to enjoy their 30% income tax relief.

Two recent launches are:

Octopus AIM VCT 1&2 – Launched in 1997 and 2005 respectively, the Octopus AIM VCTs 1&2 each have portfolios which include large, established names on the AIM market. Investors are buying into mature, dividend-paying portfolios, with about 76 holdings in each (there is a lot of investment overlap between each VCT). Octopus AIM VCTs target a 5% tax-free dividend every year.

VCT

Type of VCT Minimum Subscription Initial Charge Before Discount Discount Application Forms Closing Date

Octopus AIM VCTs 1&2

AIM £5,000 or £500/month 5.5%

2.5% for new VCT clients

3.5% for existing investors

Brochure

Application form

04/04/2018

Foresight VCT 4 – Following the merger of Foresight 3 VCT into Foresight 4 VCT, a top-up offer of £50m, with a further £50m over-allotment facility, has just been launched. The merger was primarily for cost-cutting reasons as it is cheaper to run one VCT than two, and the benefits of having more than one VCT have fizzled out with new rules coming in over the years. Foresight Four is a generalist VCT but has a higher asset weighting in technology companies.

VCT Type of VCT Minimum Subscription Initial Charge before Discount Discount Application Forms Closing Date
Foresight VCT Generalist £3,000 5.5%

5% until 31/07/2017 (full discount for existing VCT investors);

3% until 30/11/2017 (3.5% discount for existing VCT investors);

2% thereafter (2.5% discount for existing VCT investors)**

Brochure & Application form 30/06/2017

Other open VCTs

Downing FOUR VCT – This is one VCT, separated into two distinct parts - Generalist and Healthcare. It is a new VCT, but as a company Downing has a very strong track record with VCTs and are a company that we regard very highly. The healthcare specialist portion of the VCT is unique and allows an investor to choose to have exposure to that sector. We also like that they offer a monthly investment option for as little as £500 per month. 

VCT Type of VCT Minimum Subscription Initial Charge Before Discount Discount Application forms Closing Date
Downing FOUR VCT Generalist & Healthcare £5,000 or £500/month 4% 2.25%

Brochure

Application form

30/09/2017

Pembroke VCT – A VCT which is relatively new but already has a good track record, with returns of 10.5%* since March 2015. In spite of its young age, Pembroke has already started paying tax-free dividends to investors. Pembroke VCT is managed by Oakley Capital, who have been managing money since 2002 and gives them a good range of contacts. The VCT is generalist and invests into all sectors, and at the moment has a high weighting in hospitality. We like that Pembroke has the lowest Total Expense Ratio (TER) out of all VCT companies.

*unaudited

VCT Type of VCT Minimum Subscription Initial Charge Before Discount Discount Application Forms Closing Date
Pembroke VCT Generalist £3,000 5% 3% Brochure & Application form 30/06/2017

The Downside of VCTs

VCTs invest into very high-risk, smaller companies which may fail. They are also very illiquid and you may have to hold them for longer than the minimum five-year investment period. There is a rick that you will get back less than your original investment.

 

Important notice: VCTS
Please be aware that VCTs are long-term investments. VCTs usually invest in small, unquoted companies and therefore carry a greater risk than many other forms of investment. In addition, the level of charges are often greater than unit trusts and OEICs. Past performance is not necessarily a guide to the future. The value of investments, and the income from them, can fall as well as rise, due to market and currency fluctuations and you may not get back the amount originally invested. All our featured products should be regarded as medium to long-term investments. Chelsea Financial Services offers an execution-only service. If you require investment advice you should contact an expert adviser. Tax assumptions are subject to statutory change and the value of tax relief (if any) will depend upon your individual circumstances.

 

Published on 21/06/2017