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Albion ventures news

24 February 2011

Survey Results Suggests VCTs Offer Advisers Business Opportunities In 2011

A survey of 233 Albion Ventures Venture Capital Trust shareholders in Q4 of last year suggests VCTs offer advisers considerable business opportunities in 2011. 65% of the respondents to the survey also held VCT investments with other providers, suggesting that the survey offers a good sample of all VCT investors.

The survey asked shareholders how they used VCTs, for their key concerns and any changes that they would like to see to tax legislation. The results were clear cut.

VCTs as a long term investment
One of the key attractions, particularly while pensions are becoming less attractive for high earners of VCTs, is the long term evergreen nature of these savings vehicles, generating tax-free income. It is perhaps unsurprising that 74% of respondents intended to hold on to their VCT’s for at least 7 further years, or indefinitely and less than 6% planned to sell their VCT shares over the next 3 years.

36% of those surveyed have over 10% of their investment portfolio invested in VCT shares, highlighting that VCT investors have fairly substantial investment portfolios on which, over time, they will need guidance from professional advisers in converting to income and minimising the impact of IHT.

Calls for changes to IHT tax legislation
32% called for VCTs to be included within IHT tax exemptions. Other popular changes were greater income tax relief (15%) and fewer investment qualification restrictions for portfolio managers. Patrick Reeve, Managing Partner at Albion Ventures commented: “It is perhaps not a surprise that VCT shareholders’ greatest concern is IHT; this is the first year of twenty years of baby boomers retiring and along with pensions, estate planning is a key concern.”

A clear appetite for VCT investing in 2011
As the end of the present tax year draws near, the survey’s results also showed a clear appetite for VCT investing. When asked if they were likely to further invest in a VCT, this year 64% of respondents said they were considering it, but had not yet decided. Evidently, there is appetite for VCT investment that advisers can help facilitate.

Patrick Reeve, Managing Partner at Albion Ventures continues: “The results from our 2010 shareholder survey proves that VCT investors, if happy with the performance of their VCT investments, will largely continue to invest in VCTs and are actively seeking new investment opportunities. That a third of respondents were also looking ahead at estate planning and IHT is perhaps unsurprising, but the results of this survey do reinforce the business opportunities that VCTs offer financial advisers in 2011.

“Particularly pleasing for Albion was that despite the market turmoil over the last two years, the percentage of shareholders that are happy with the dividends they have received has risen (80%) and the majority of our shareholders would invest further in Albion VCTs.

“Historically February and March is the boom period for VCT investment, when around 70% of all VCT money invested annually is raised. Albion’s new linked top-up offering, across our VCT range, will offer investors a regular monthly dividend from ‘day one’ and we expect that this investment opportunity will prove popular to our existing and new VCT investors at a time when attractive income is hard to come by and higher rate tax payers are seeking new tax efficient investment opportunities for their portfolios.”

Matt Brown, RAM Capital said: “Feedback from our recent VCT and EIS adviser roadshows further enhances the shareholder survey, with adviser sentiment matching that of end investors. Albion’s linked top-up paying income regularly and instantly has been received well and adviser feedback suggests that share buybacks are welcome to improve liquidity. Advisers were further encouraged by the fact that the Albion management team have invested so much of their own capital in the VCTs.”