My 2017 VCT performance

[Shavtedagin]

Happy New Year all.

Having read various posts with regard to the new offerings last year, I noticed a couple of references to "good returns" from the VCTs. I started to wonder if this was something I had inadvertently misjudged and looked back at the year's performance.

As a bit of background, this only includes new offerings (from 2005 onwards) containing approximately 25 VCTs from most of the popular stables, though the really good returns I have experienced have come from buying secondhand VCTs at hefty discounts.

So for 2017 only, using NAVs at beginning and end of year (and rough [expletive deleted] calculations)

Normal dividends have averaged out at 5.8%.

Special dividends have covered the associated drop in NAV and additionally gave a 2% return on capital.

I am reasonably happy with this as it's kind of what I signed up to, but clearly with more sensible fees the returns could be closer to 10%, but still not stellar.

So, the only real reason I see to invest in current VCT offerings is still the tax incentive (not recommended, but it's partly what got me started). I would be wary of the new offerings as the fees are now way too disproportionate to the performance and risks that we as shareholders are exposed too.

I'd be interested to know how others have faired last year.

[Blagdon]

I have not bought any new offers for more than 5 years. I do not think the likely return versus cost & risk is worthwhile.

I have made some very very good returns from buying secondhand VCTs at hefty discounts - but unfortunately I think that has now run its course.

[Blagdon]

Sorry just realised you specifically asked how people had fared last year.

2017 VCT performance = 23.9% IRR calculated by MS Money - which is down on the 30-32% pa I have averaged over the last 6-7 years.

But as per previous post that is nearly all from buying second hand at substantial discounts including quite a few EBBs (when they were still allowed).

[james188]

I have not yet worked out the IRR, but for the 2017 calendar year the yield on my VCT portfolio ignoring tax was over 15%. That portfolio has more or less all been acquired through top-up offers and DRIS, rather than secondary market deals and comprises leading generalist VCTs rather than more esoteric offerings, with the Mobeus and ProVen VCTs being the top contributors, followed by Northern. We will see what 2018 brings, but the recent Mobeus sale announcement was a decent start. It will be interesting to see what Baronsmead have to say about market conditions at the forthcoming AGMs/presentations. They had a pretty quiet 2017.