Change of mood hits capital trust market


23-03-2001

The venture capital trust market has slowed down considerably in the first quarter of this year, according to independent performance analysts, Allenbridge.

It seems unlikely that all the VCTs will get the money they are looking for, but investors are faced with the dilemma of 'missing the boat' if they eschew opportunities on offer now. Allenbridge fears there will not be so much choice in a few months' time.



Martin Churchill, of Allenbridge, said little more than a quarter of the money being sought by the VCTs had been raised so far and that some would have to be pulled altogether.



'The VCT market was buoyant in the last quarter of 2000, but has become sluggish.



'We expect it to accelerate as the tax year-end gets nearer, but it looks as if not all the VCTs will get all the money they are seeking.



'Those open at present have capacity of 468.5 million, but have raised only 126.2 million. We expect them therefore to stay open well into the next tax year.'



Mr Churchill said investors with gains who reach the 12-month deadline for sheltering in a VCT around October were faced with a dilemma, whether to invest in the current crop of trusts, or hold on and hope enough new ones would be launched in the new tax year.



'My view is that the range of choice available is unlikely to be repeated in time for an October allotment, so investors should seriously consider acting now.'



Phil Cammerman, who manages British Smaller Technologies Companies VCT, which is advised by Generics Group at Harston, said: 'There is a huge range of VCTs on offer at the moment, some from managers new to the sector and with no track record for raising money and investing it.



'Some of these do not reach the minimum fund which means investors have their money returned and can't get all the tax benefits.



'The lesson is to concentrate on finding managers like ourselves who do have a track record.



Mr Cammerman continued: 'The market is very different from last year when VCTs were sold out in five minutes. People are no longer in investing mood.



'But this is something that affects ordinary people.



'VCTs are like super-charged ISAs and the tax shelter is tremendous.'