Venture capital trusts

rl290

Out of interest, does/has anyone invested in a VCT? I'm surprised that there hasn't been a recent topic on this given the tax benefits. Up to 30% of your initial investment back as a tax rebate, then no capital gains tax or tax on dividends/distributions. Of course, it's quite a high risk investment.

I'm planning to put a bit of money into Octopus' new Titan 3 fund. Their previous VCTs claim to have made an average annual return of 29% on all assets (included those that are unrealised), and have made 61% per year on realised assets - though both these figures are unaudited.

I imagine that a good trust manager will be presented with some amazing opportunities in coming years... plus the 30% tax rebate limits downside in any case to 70% of the initial investment should everything go wrong! Any thoughts?

Reaper

I think higher risk investments have taken a back seat in the current crisis. Even buying into blue chip FTSE100 firms is currently fraught with danger without upping the risk still further.

You do have to choose your VCT very carefully, though it sounds like you have been doing the research.

I'm sure if you do a forum search you will find past discussions of VCTs, though not recently.

I've never gone for one though I have been tempted in the past. Good luck.

dunstonh

Given the higher risk nature and them being designed for the experienced investor rather than the typical retail client, this forum isnt really the place to discuss them.

Just look at all the hassle Martin got about a [non regulated] savings account from people that didnt read the warnings on that. Warnings that technically didnt need to be there. VCTs would have to come with masses of warnings and many would lose a lot of money and could you imagine the stick he would get then?

cheerfulcat

rl290 wrote: »

Out of interest, does/has anyone invested in a VCT? I'm surprised that there hasn't been a recent topic on this given the tax benefits. Up to 30% of your initial investment back as a tax rebate, then no capital gains tax or tax on dividends/distributions. Of course, it's quite a high risk investment.

The main problem to my mind is that the rules have been tightened up so much on new investments by VCTs - this has made them even riskier than before. My other main concern with them is their illiquidity - since the shares bought in the market don't have the same tax breaks ( except for the dividends ), demand doesn't seem to be that great. As ever, of course, there is the rule of not letting the tax tail wag the investment dog...

Having said that, I am certainly looking at the possibility of buying " second hand " VCT shares in the market at some point. There is a dedicated VCT board on TMF ( LINK ); it's pretty quiet but there are a few very knowledgable posters there. Probably a better place than MSE for this discussion!

You probably already know about the AIC but in case you don't here's a LINK to the VCT page.

rl290

Thanks for the links cheerfulcat - I hadn't seen the Fool's forums before.

R