Will Fraser Allen, who runs £340m across a range of six venture capital trusts (VCTs) at Albion, has revealed he will focus more on technology investments with the next lot of capital he raises.
The longest established of the six VCTs, Albion VCT, has tripled investors cash since launch 20 years ago.
In that time the average VCT has returned 34 per cent.
Albion are seeking to raise £38m of fresh capital to invest across the range of its six VCTs.
The VCTs have a current income yield of 7 per cent.
Mr Fraser Allen has traditionally deployed 50 per cent of the capital into “asset backed” investments, such as schools and medical facilities, 30 per cent into technology companies and holds 20 per cent in cash for future investments.
Asset-backed investments, often in the areas of infrastructure, have been extremely popular investments in recent years, pushing valuations upwards.
Mr Fraser Allen is focusing of the technology area of the portfolio.
He said the companies in this area of the market tend not to be sensitive to the performance of the wider economy.
VCTs offer a 30 per cent tax relief on the initial amount invested, after five years.
All dividends and capital gains are tax free.
Mr Fraser Allen said he views the VCTs he runs as income products.
He said the valuations of some technology companies whose products are aimed directly at the consumer have become extreme, so he is focused on companies that sell their products to other businesses.
Among the recent investments made by the trusts are OVIVA, a medical technology company providing services to dieticians.
Among OVIVA’s clients is the National Health Service (NHS).
Mr Fraser Allen has also invested in G Network, a company providing broadband to small companies in central London.
In 2015, HM Revenue & Customs changed the rules around the sort of assets into which VCTs can invest.
Cash from VCTs could no longer be deployed into management buyouts or renewable energy assets.
Mr Fraser Allen said the aim of the reforms was to push VCT capital into early stage companies and this has succeeded.
Jason Hollands, managing director at Tilney Group, said uncertainty around whether the current system of UK tax reliefs would continue is likely to drive demand for VCT investments this year.
Mr Fraser Allen said around 50 per cent of the capital in Albion VCTs comes through financial advisers, with the remaining half coming through execution-only platforms, or directly from private investors.