AIC backs Woodford's call for new Isa

AIC backs Woodford's call for new Isa

A 'patient capital' Isa has been proposed by the Association of Investment Companies (AIC) in its response to the government's Patient Capital Review, echoing comments made earlier this week by Neil Woodford.

On Tuesday (21 March) at a House of Lords science and technology committee hearing, Mr Woodford urged the government to create a Patient Capital Isa to boost investment in early stage science and technology companies.

Mr Woodford manages the £758m Patient Capital trust for Woodford Investment Management, which largely invests in disruptive early-growth companies.

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The trust has returned 3.6 per cent over the past year, underperforming the UK All Companies sector, which has scooped up 20 per cent over the same period, FE figures revealed.

Speaking to FTAdviser Mr Woodford said investors would be encouraged to hold shares for at least seven years if they were granted inheritance tax taper relief.

Ian Sayers, chief executive of the AIC, said: “The creation of a Patient Capital Isa would encourage retail investors to provide much-needed long-term capital for companies.

"It’s encouraging that this idea has also been suggested by Neil Woodford - the phrase ‘great minds think alike’ comes to mind."

Mr Sayers added that closed-ended structure of investment companies were an ideal vehicle for providing stable or 'patient' long-term capital to companies. 

"Venture capital trusts have played a vital role in providing finance and support to SMEs, the backbone of the UK economy," he said. 

"They have an excellent track record of providing scale-up capital to smaller companies, creating growth, jobs and innovation.”

The AIC has also recommended that the Patient Capital Review should reconfirm the positive role venture capital trusts play for small UK businesses and it proposed the removal of regulatory barriers to investment advisers recommending funds that provide such capital vehicles.