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EIS performance???

Sophisticated and complex high-risk tax-sensitive investments in small companies: handle with care
Shinyuk
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EIS performance???

#138731

Postby Shinyuk » May 13th, 2018, 9:51 am

I know this is a VCT thread but past posts have included some EIS discussion and I cannot find a separate EIS thread, so apologies upfront if this is not in the correct place.

I have a large potential CGT bill this year and was attracted by the dual tax benefits of EIS for CGT deferral and income tax relief. However, as a VCT investor for over 8 years, I’m used to the performance data with VCT funds and “independent” reports. For EIS funds, it’s a desert. I can find little or no data at all! For any VCT investors on this board that have also invested in EIS. How did you decide which EIS funds to invest in? Are there any you would and/or would not recommend. Any oasis in the EIS data desert gratefully received!

Vulgaris
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Re: EIS performance???

#138740

Postby Vulgaris » May 13th, 2018, 10:21 am

I put £10000 into the Guinness AIM EIS 2014 offering, which was invested over around 20 AIM stocks, in unequal proportions. I preferred an AIM fund as being more transparent.

This portfolio is now being run down. Thus far, in round terms, returns, after charge, are:

£3000 tax relief
£10000 share sale proceeds remitted
£400 reclaimable vs income tax from HMRC for shares sold at a loss.
Minus £200 original tax relief lost & repaid to HMRC owing to one share being sold (or being taken over, I forget) within 3 years.
Value of residual portfolio c. £2000, which they aim to run down before July

I look on this outcome as pretty good ---- I'd saved £3000 tax and made >20% return over 4 years. The likelihood of a respectable outcome was apparent by end-2016 and led me to put up larger sums for their 2017 and 2018 offerings (issues close on the 5 April of the named year). Contract notes for investments made on the 2017 are now tricking in and I find myself somewhat concerned by the number of pharma issues they're buying into. I spend some of my time consulting for small pharma and have few illusions apropos the odds against success. Already, Faron, which the 2017 fund bought into has taken a nasty hit.

In terms of admin I've found Guinness to be straightforward and efficient; Chelsea FS negotiated small discounts on their fees.

UncleEbenezer
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Re: EIS performance???

#138763

Postby UncleEbenezer » May 13th, 2018, 11:54 am

I've never invested in an EIS managed fund (too high minimum for me). But I'm aware that some share management teams with VCTs and co-invest, which gives you a proxy measure.

Direct EIS investment is another option, though more work finding and researching opportunities (I have just one direct EIS investment). But a halfway house is offered by crowdfunding platforms. Have you considered that as an option?

Shinyuk
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Re: EIS performance???

#138775

Postby Shinyuk » May 13th, 2018, 12:35 pm

UncleEbenezer wrote:I've never invested in an EIS managed fund (too high minimum for me). But I'm aware that some share management teams with VCTs and co-invest, which gives you a proxy measure.

Direct EIS investment is another option, though more work finding and researching opportunities (I have just one direct EIS investment). But a halfway house is offered by crowdfunding platforms. Have you considered that as an option?


Thanks Unc,

I’ve tended to veer away from crowdfunding platforms. Although we’re talking about the racier end of the investment spectrum (though in my experience many VCTs have been reasonably safe at least before the rule changes), I prefer the diversity of collectives rather than single, direct investments. I like your point about read across from VCT fund teams and will look into that further.

Mark
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Re: EIS performance???

#139022

Postby Mark » May 14th, 2018, 5:05 pm

Tax Efficient Review is a paid-for publication which rates EIS schemes and can be quite illuminating. The subscription fees are quite high but some financial advisors selling EIS managed funds will provide the review for free.

Personally I have invested in the Draper Esprit EIS schemes for the last few years, they mostly invest in new technology firms. It is early days yet but they have just sold their shares in a company called Grapeshot to Oracle for a 10 times return on investment. Might be worth looking them up.

SpinDoctor
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Re: EIS performance???

#139917

Postby SpinDoctor » May 18th, 2018, 8:31 pm

Yes, it is harder work determining the merits of the various EIS/SEIS offers, but worth the effort.

Many of the 'Tax Efficient Review' appraisals are freely available on the web, having been paid for by the fund manager - just search for 'tax efficient review eis pdf' and perhaps limit the search to the last year.

Kin Capital (https://www.kincapital.co.uk) provides interesting commentary and plugs a handful of (in my view) decent funds across the VCT/EIS/SEIS/SITR spectrum.

Kuber ventures (https://www.kuberventures.co.uk) also has interesting generic and fund specific commentary.

Frankly though I think the best approach is to take your time and do extensive due diligence across all/many of the offers, and reach your own conclusions. And make sure you diversify across managers and sectors. Costs are often high; performance fee arrangements are a key discriminator in my view.

Without wanting to plug any particular fund(s), I have been interested in the Innvotec offers (http://www.innvotec.com). They keep a relatively low profile.


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