Venture Capital Trusts  

Guide to VCT investing

  • To understand the basics of VCT development over the past two decades.
  • To ascertain what sorts of clients might be interested in VCTs and why.
  • To list the various pros and cons of using VCTs for pensions.
CPD
Approx.60min
Guide to VCT investing

Introduction

Venture capital trusts (VCT) have had a good start to 2018 so far, with millions of money coming in from investors.

Even before the end of the 2017 to 2018 tax year, signs are this will be the biggest year for VCT investment to date, with £567m raised as at 6 March and the lion's share of this going so far to Octopus Titan VCT, according to data from Tilney.

VCT managers have reported a successful raising and closing of funds, in the light of what Will Fraser-Allen, deputy managing partner for Albion Capital, calls "a transformative few months for the industry".

With the changes being ushered in as a result of the government's Patient Capital Review, along with the challenges and opportunities that Brexit might bring, what lies in store for VCT managers and their investors?

Moreover, will the continual erosion of pension tax benefits make VCTs a more attractive option for those seeking long-term retirement planning - and what sort of trends are emerging in the types of investors now putting their pounds into VCT funds?

This guide, which qualifies for an indicative 60 minutes' worth of CPD, will explore these questions.

Contributors to this guide: Will Fraser-Allen, deputy managing partner at Albion Capital; George Bull, senior tax partner at RSM UK; Annabel Brodie-Smith, director of communications for the Association of Investment Companies; Jason Hollands, managing director of business development and communications for Tilney; Paul Latham, managing director of Octopus Investments; Alex Davies, chief executive of Wealth Club; Tim Stovold, head of tax at Kingston Smith; Darius McDermott, managing director of Chelsea Financial Services; Jack Rose, head of tax-efficient investment at LGBR Capital; Stuart Veale, managing partner of Beringea; David Goodfellow, head of wealth planning for the UK and Europe at Canaccord Genuity Wealth Management; Chris Hutchinson, manager of the Unicorn AIM VCT; The IESE Business School at the University of Navarra; the Patient Capital Review.

Simoney Kyriakou is content plus editor for FTAdviser

In this guide

CPD
Approx.60min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. How does Mr Davies describe the early days of VCT investing?

  2. What does Mr Hutchinson say has become more challenging and complex over the past 20 years?

  3. What has broadened the base for VCT investing, according to Mr Rose?

  4. Mr Hollands says what should rank as a higher priority for younger people than VCT investing?

  5. Which of the following is NOT cited by Ms Brodie-Smith as a reason people are using VCTs for pension saving?

  6. What does Mr Bull think Brexit might enable the UK government to renegotiate?

Nearly There…

You have successfully answered all the questions correctly, well done!

You should now know…

  • To understand the basics of VCT development over the past two decades.
  • To ascertain what sorts of clients might be interested in VCTs and why.
  • To list the various pros and cons of using VCTs for pensions.

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