VCTs in a recession/early recovery

[mardo]

Hello all. I've invested in equities for 25+ years but I'm relatively new to VCTs and would appreciate your collective wisdom. I bought MIG1 and MIG5 two years ago and the six Albion funds last year.
May I seek your guidance about how funds tend to perform during a recession/early recovery please?

Quoted smallcaps often lag the FTSE100 during initial recovery, and I wonder whether VCTs may be further lagged because NAV is sometimes influenced by director/third party assessment of asset value. This can be slow to adjust when asset values are declining. The 30% tax shield is helpful but may be eroded by slow NAV downgrades, high VCT fees, and balance sheet repair for existing portfolio assets. Perhaps I should invest in quoted equities in Q123 and double up the VCT investment in late 2023?

Many thanks in advance for your thoughts.

[Vulgaris]

.... all depends on their investments.... Baronsmead and Albion came through 2007-9 unscathed. Others were badly wounded, with prices down 80%. Electra's dismal funds spring to mind.

[UncleEbenezer]

Bear in mind that the tax relief applies only if you hold for at least five years. So if you want to time the market, that's the bare minimum for how far your crystal ball has to look.

I've recently subscribed to two offers, in the knowledge that I'm getting better value than last year, and the hope that my VCTs will be picking up some bargains in today's market. Of course my money there is at high risk, but that applies to any investment in UK plc and indeed - to a greater or lesser extent - much of the world. And speaking personally, five years takes me almost to my state pension, whereupon the importance of other income radically diminishes.

[Kidman]

Generaly private equity has invested year by year so they can compare vintages. VCTs being evergreen don't have the same characteristics but there will be some similarities with offer years.

Private equity vintages depend, like anything else, on the buy prce and the sell price. If the P/Es to buy into companies are low at the time of the investment then all well and good. Similarly there are some years when the exit market is frothy, plenty of companies buying anything in sight to grow etc.

Surely in the end if one has a decent spread then one should get an average return?

[mardo]

thanks all. I found time to check this out on a Bloomberg terminal.
Looks MIG1 and the six Albions underperformed the FTSE Allshare by 20-30% in the first 6-9 months of the 2009 recovery. MIG5 did much better.

I think I'll invest in liquid quoted equities over the next few months and add some VCTs when they fundraise in late 2023.