The latest official HMRC VCT figures released this morning show the amount invested in the tax year 2017/18 was £745 million. This is up from £570 million the previous year and is the second highest amount invested on record.
At the same time official figures for the number of people taking out VCTs for the tax year 2016/17 show 15,120 people took out a VCT, up from 13,405 in the previous tax year.
Alex Davies, founder of Wealth Club comments: “HMRC’s annual report into VCT funding reaffirms their popularity amongst wealthier and more sophisticated investors. It’s hardly surprising they are becoming an increasingly mainstream investment choice – the restrictions on pensions mean they are one of the last relatively simple and tax efficient investments left for wealthier investors. Performance over the last 10 years has also been good.
“But the good news doesn’t stop with investors. Investment by VCTs into young, fast-growing and innovative British businesses is also proven to create lots of jobs and boost UK PLC.”
Alex Davies, Wealth Club, recommends his top-picks for 2018/19: “If the last two tax years are anything to go by, popular offers fill up extremely quickly meaning lots of investors miss out. The message is clear. If you want to invest in a VCT this year and spot something you like, don’t hang around. I like the following VCTs:
“Octopus Titan VCT: With more than £615 million of net assets, it is the ‘Titan’ of the VCT world. From the start, it has focused on early-stage companies, often in the technology sector. It has a track record of spotting rising stars and achieving high-profile exits, including trade sales to the likes of Amazon, Google, Twitter and Microsoft. Zoopla, Secret Escapes, graze.com, and Tails.com all received funding from Octopus Titan. If any VCT is going to find the next Facebook, we believe that it will be Octopus Titan.
Octopus Titan has delivered a NAV Total Return of 112% over the last 10 years. (Source AIC).
“Maven Income & Growth VCTs 1 and 5: Maven is one of the best-regarded VCTs and for good reason, in my view. At the core of Maven’s portfolios are some excellent, mature, businesses doing “real things” – from the UK’s largest manufacturer of shower trays to a company that provides services to refineries and chemical and petrochemical plants around the world. The exit track record is impressive: 15 since January 2014, with an average return multiple of 3.3x.
Maven Income and Growth 1 and 5 have delivered a NAV Total Return of 87% and 112% respectively over the last 10 years. (Source AIC).
“British Smaller Companies VCTs 1 and 2: The British Smaller Companies VCTs are amongst the granddaddies of the VCT world with a really experienced manager behind them. They have been around a long time and BSC 1 in particular has delivered excellent returns. Past successes include the sale of Go Outdoors to JD Sports Fashion for £130m which produced a 37.2x return for the VCT. Thanks to that, in 2017 VCT investors received a special dividend of 16.5p, on top of the ordinary dividend of 5.5p.
British Smaller Companies VCTs 1 and 2 have achieved NAV total returns of 123% and 40.41% over the last 10 years (Source AIC).”