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Although Axa's figures indicate a NAV fall of 32 per cent between last October and the end of March, the drop in value between January to May is said to be in the region of 44 per cent.

In his interim report a fortnight ago Tim How, chairman of the Aim VCT 1, said the portfolio had been hit by investor nervousness in the small-cap space.

One adviser said he had a high net worth client who had seen half his investment evaporate after putting it into the venture capital trust three years ago.

The IFA raised doubts over the stock selection abilities of fund manager Brian Watson, who is a member of Axa Framlington's UK smaller companies desk.

He said there should be some serious questions asked about the stockpicking and the research that's gone into the VCT.

But Rob Bailey, head of UK retail sales at Axa, defended Mr Watson's skills and said he had "one of the longest, most established track records of a fund manager in this area".

He added: "It is worth comparing our VCT to the peer group, where other funds have had meaningful corrections to their share prices since the middle of last year.

"Clearly our NAV as a whole has gone down, but bearing in mind what's happened at this end of the market, it has not done as badly as it could have."