Tax benefits and lower volatility make VCTs an enticing play for investors

VCTs

The case for VCTs remains strong as a comparison between the FTSE All-Share and 14 generalist VCTs over the past five years shows. Add to this lower betas, tax reliefs and tax free dividends and it is no surprise they are growing in popularity

The year 1995 heralded a brave new world for venture capital trusts (VCTs) when Ken Clarke, the Tory Chancellor of the day, wanted private investors to direct their capital towards smaller fast-growth, unquoted and Aim-traded companies. There was early evidence the number of good quality jobs created by such companies was exceptionally high. In the last survey by the British Venture Capital Association (BVCA) of the five years to 2002/03, venture-backed businesses increased new jobs at the rate of 19% annually, triple the level of FTSE 100 companies. Sales growth was also double the top 1...