The take-up of venture capital trusts through adviser platforms is expected to grow over the next 12 months, according to new figures.
Around 91 per cent of advisers surveyed by Intelligent Partnership said they expected to do more VCT business over the next 12 months.
According to the survey, VCT funds under management have risen from £3.22bn to £3.46bn over the tax year ending 5 April last year.
Guy Tolhurst, managing director of Intelligent Partnership, said: “We think advisers may have been wary of VCTs in the past because of their reputation for high costs, trading at a discount to the net asset value (NAV) and because of the marketing advantages open-ended funds enjoyed pre-Retail Distribution Review.
“Our research suggests that this is now starting to change, and more and more advisers are considering VCTs.”
Discussion with advisers revealed lower limits on the amounts that can be saved into pensions, and the threat to higher rate tax relief are expected to lead to increased take-up of other tax-efficient alternatives, such as VCTs.
Ian Sayers, chief executive of the Association of Investment Companies (AIC), said: “The ongoing changes to the lifetime and annual allowances for pension contributions are also leading to increased demand for VCTs.”
The report also looks closely at the potential impacts of the recent changes announced in the July Budget to ensure continued compliance with EU State Aid rules.
Funds raised via the scheme can no longer be used for company acquisitions or management buy outs, and this will mean that some VCTs will have to adjust their operating models and are likely to have to take on more investment risk than previously.
Dan Kiernan, Intelligent Partnership’s director of research, warned advisers to be careful when assessing VCTs, adding they must take the new rules into account if they are looking at a performance track record that was based upon an investment strategy built around acquisitions and management buy-outs.
katherine.denham@ft.com
