Venture Capital Trusts  

Product review: Octopus launches £70m fundraise for Titan VCT

Product review: Octopus launches £70m fundraise for Titan VCT

Octopus has launched a new £70m fundraise for its Titan Venture Capital Trust (VCT).

Already the largest VCT in the market with £309 in assets under management, Titan – in a UK first – will offer the facility for investors to make phased, monthly contributions. Octopus says this is with the view of enticing investors who intend to use the upfront tax relief available with VCTs as a replacement or complement to pension planning.

First introduced to market in 2007, the Titan VCT aims to focus on investment in early stage companies to achieve investment growth. Currently, it offers a portfolio of around 50 smaller companies with a mixture of very young business to those that have become more established. With the monthly contributions, new shares are issued roughly every three months.

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The share offer is open until 22 August 2017, but will close earlier if fully funded. The current minimum investment is £3,000 and investors will be able to claim 30 per cent upfront tax relief for investments up to £200,000pa.

www.octopusinvestments.com

Comment:

VCT providers must be rubbing their hands together at the moment. With every swipe the government takes at pensions and buy-to-let, alternative methods of investing – especially in terms of retirement planning – become more attractive. 

Although legislation has provided a few obstacles for VCT providers, the key incentives for investors (mainly tax relief) have been left unscathed. 

It is strange to think this represents the first UK VCT to offer regular contributions because regular investment is something many savers and advisers favour. 

If providers hope to offer an alternative to pensions, then this approach is not only fundamental, but also potentially game changing.

Although Octopus seems keen to attract mainstream investors as well as those who are more sophisticated, the risk-averse should ponder wisely. Returns of the Octopus Titan VCT have been impressive over the past five years, but this has been achieved with a high degree of potential volatility. 

Regular contributions can possibly mitigate this and may provide the carrot for a wider range of investors to dip their toes in the VCT market.

As the hunt for tax relief intensifies before April 2017 and options for high-earners dwindle, Titan’s £70m fundraise should be achieved well ahead of schedule. 

craig.rickman@ft.com