Demand

[onslow]

FYI I'm interested in the following generalist VCT funds this year and I thought it was interesting how demand is playing out. I've outlined them below. Thoughts welcome.

Summary - I'm quite an amateur VCT investor and this year is my first year of allocating funds in earnest to the VCT sector given limits on pensions/ISAs (Though I had a small nibble at Unicorn last year)

Generally speaking - and maybe OT - I think all asset classes are overvalued around the world and have a large portion of my assets in cash, its been painful to watch markets grind higher over the last few years. Therefore I've decided to make some selected investments in VCTs to "balance out" my portfolio by introducing some risk. Tax benefits help too. I have a small concern that the upcoming budget may change VCTs rules to a greater extent than envisaged which may lead to a "rush" to invest by all these cashed up VCT funds - that obviously wouldn't be good from an investor point of view.

Given my general view of assets being overvalued I've limited my applications to those with a good track record, and after reading through both their current & previous prospectuses to get an overview on their thinking over recent years. Reviewing the comments on this forum from more experienced investors too has helped - so thanks!

Looking at https://www.clubfinance.co.uk/VCT-funds-raised.php:

Mobeus - firm demand and just over half of the available offering has gone. 30m rasied in one month. Glad I got in.

Maven - $1.8m rasied in just over a week. I'm surprised its been a relatively slow start compared to others, given the research I've done (remember - amateur VCT investor!) they come across as a well run VCT with a good income producing portfolio. Curious.

Albion - very surprised. Relatively low demand compared to others. 5.5m raised in 1 month. Not withstanding the withdrawal of AAVC I would have thought demand would be higher. If I'm unsuccessful with other offers I may make a second application for the 5 remaining Albion funds. I can see the attraction of AAVC but the other funds look solid too. Intrigued.

Northern VCTs are going like hot cakes(as expected). Will be interesting to see if demand slows given its now 2 weeks since they opened.
Presumably those eager investors(old & new) have sent their applications in my now. Interestingly, Northern Venture Capital Trust is going a lot quicker than others - thoughts on why? I applied for all 3.

Baronsmead - 2 week exclusive period for new applicants like me makes me hopeful but I really have no idea. Kicking myself I didnt make a small on-market purchase earlier in the year for this and Northern - I thought about it, didnt do it.

Looking at Pembroke too, that might be a fallback application if I'm unsuccessful with some of the above.

Yes, yu could say I'm quite sad by checking out the fund raising figures on a daily basis!

[Kidman]

Onslow, that's a nice summary and for me it's refreshing to see your view as I have been investing in VCTs since the mid 1990s and one can lose track of what has happened.

I would like to make a few comments and will follow your order.

Mobeus, I think they were Matrix and I did okay with some of them many years ago but have lost touch since selling them.
Maven, I've been in and out of them due to various management changes and I think they are steady but they never capture my imagination, they don't seem to have occasional big wins to publicise their case but they don't seem to have big write-offs like Acuity and Foresight.
Albion, asset based specialists so they may be suffering from the 2015 rule change. I never thought asset based was a selling point having seen such companies go bust as quick as those without assets!
Northern, I have been a long-time Northern investor but am a bit concerned about some of their recent investments. However, I generally like their style and to answer your question about Northern 1 applications, I think it is as simple as that they have more shareholders than 2 or 3.
Baronsmead, my favourite since the late 1990s but I am worried that they may not be on top of the 2015 changes. They annoyed me with their handling of their recent mergers so I am being more wary of them these days.
Pembroke, I've gone in for 'B' shares and expect to add to them later this year. Along with Octopus Titan they seem to be the most suited to current regulations but it will take a big exit or two to get the message across. At least that makes for more relaxed applications!

[Vulgaris]

Unicorn and the Octopus AIM twins also are filling steadily, with over 75% sold. Octopus Titan is massive, but looks slow. Foresight 4 is going at about the rate it deserves, given its history.

What we don't know is how many prospective buyers have the cashflow to deal, given that so many large offers have come so early, well before bonus season.

[moorfield]

Generally speaking - and maybe OT - I think all asset classes are overvalued around the world and have a large portion of my assets in cash, its been painful to watch markets grind higher over the last few years. Therefore I've decided to make some selected investments in VCTs to "balance out" my portfolio by introducing some risk. Tax benefits help too. I have a small concern that the upcoming budget may change VCTs rules to a greater extent than envisaged which may lead to a "rush" to invest by all these cashed up VCT funds - that obviously wouldn't be good from an investor point of view.

Eh? You think all asset classes are overvalued so have moved from the most liquid to one of the least liquid. Introducing some risk to your hard-earned you certainly are!

You're right be concerned about upcoming budget changes - literally at the stroke of a (marxist) chancellor's pen or fat-cat board's self interest the VCT exit doors could seize up completely.

[onslow]

Some good comments and contributions in this thread! Just coming back to my OP, with Baronsmead on Friday confirming my successful application I'm fortunate enough to have been accepted for all the offers I applied for:

Mobeus
Maven
Albion
Northern
Baronsmead

I've spread my applications across each of the funds being offered by each VCT(ie all 5 Albion funds), and, with the exception of Albion I'm a new investor to all. Thanks to the regular contributors on this board as without judicious monitoring of some of the comments/posts I probably wouldn't have gotten my postal applications in as early as I did!

Of course, applying for VCTs is the easy bit. Now we need to see how they perform. I'm well aware a lot of money is being raised this year, potentially all chasing the same assets in an uncertain economy. However my view is the funds I've applied have a good track record, and strong management so I'm comfortable with my applications.

As mentioned above given I'm in my 30s I've decided to go out on the risk curve somewhat with VCTs this year, the 30% tax relief (which I dont think we will be around medium term) & the accessibility of offers to new investors this year(some of the funds have stated they wont be raising next year) makes this a reasonable time to invest IMO. Of course,I wish I did so back in 2014 when I first looked into VCTs. Hindsight and all that.

Lets see in 12 months if I'm so pleased with my successful applications

[BusyBumbleBee]

Lets see in 12 months if I'm so pleased with my successful applications

I'm sure you will be if you only look at the next 12 months to 3 years. The plums in the existing portfolios will continue to ripen and you will get dividends but in the meanwhile the monies raised will lose about 2 per cent per year in fees until invested and then will be invested in a mixture of plums and lemons - and the lemons will ripen (or is it rot?) first. I am not at all sure you will be happy in five years time - even if there are no further rule changes in the upcoming budget.

[sinterklaas]

Lets see in 12 months if I'm so pleased with my successful applications

I'm sure you will be if you only look at the next 12 months to 3 years. The plums in the existing portfolios will continue to ripen and you will get dividends but in the meanwhile the monies raised will lose about 2 per cent per year in fees until invested and then will be invested in a mixture of plums and lemons - and the lemons will ripen (or is it rot?) first. I am not at all sure you will be happy in five years time - even if there are no further rule changes in the upcoming budget.

Cheery comment, BBB! Do I take it you are not investing further this year?

[BusyBumbleBee]

Cheery comment, BBB! Do I take it you are not investing further this year?

I am not investing in VCTs this year - except for some DRIS. I have been round the loop three times since VCTs were first launched.

Too may uncertainties - too many offers - too many rule changes - too many people thinking of investing in VCTs - too many AIM shares have reached new heights - and so on - make me very wary. I will wait and buy when disappointed investors sell out at a loss and the lemons have all ripened or rotted (whichever it is)

I will of course be glad to be proved wrong.

[Shavtedagin]

Tend to agree BBB. Too much money chasing overpriced stock. However, things like this can continue for a while before bursting, so would not panic sell any VCTs, just sit back and take the dividends.

I too think there will be some disappointed investors during the most recent fundraisings.

Despite some obvious good times, many new issues from up to 10 years back are still underwater. Strong money has been made from the heavily discounted secondary market in 2009/2010. Wonder if we will see a repeat of this in a few years time?

[UncleEbenezer]

Anyone here applied for (either or both of) the ProVens?

It'll be mildly interesting to see how a small offer from a middling-popularity stable progresses. Whether the first we hear of progress is that the offers are full.

[sinterklaas]

Well, they only went and did it… Octopus Titan just closed, having raised the maximum £200 million.

https://www.wealthclub.co.uk/articles/i ... deadlines/

By my rough calculation that is in just under 7 months, or circa 200 days, so they have managed to raise an average of £1 million a day. Somewhat comparable to the Northern offer.

Thought VCT demand might drop off after the Budget, but it appears not.

[UncleEbenezer]

The taxefficientreview figures for the year's fundraising add up to
[fanfare]
£666 million.

Anyone here superstitious?

[sinterklaas]

AIC figure came out yesterday as well, which is a more comprehensive way of calculating it, and comes out as £728 million:

https://www.wealthclub.co.uk/articles/i ... g-2017-18/