VCTs: Adventurous but risky roads to profit

Venture capital trusts have become popular thanks to the tax breaks they offer. But before you dive in, Phil Oakley explains the risks of investing in them.

With central banks squeezing savings and the government threatening to crack down on tax breaks on pensions and even individual savings accounts (Isas), it's little wonder legal tax shelters are more popular than they've ever been.

Venture capital trusts (VCTs) now have a record £2.9bn invested in them, says the Association of Investment Companies (AIC), as high earners try to cut their tax bills. But do the breaks offset the risks?

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Swipe to scroll horizontally
Octopus AimOOA108p5p4.6%106%2.5%-6.9%
BaronsmeadBDV73.5p6p8.2%78.9%2.6%-5.7%
Northern Venture TrustNVT80.5p6p7.5%110.3%2.6%-15%
Unicorn AimUAV112p5p4.5%120%2.5%-14.9%

Phil spent 13 years as an investment analyst for both stockbroking and fund management companies.

 

After graduating with a MSc in International Banking, Economics & Finance from Liverpool Business School in 1996, Phil went to work for BWD Rensburg, a Liverpool based investment manager. In 2001, he joined ABN AMRO as a transport analyst. After a brief spell as a food retail analyst, he spent five years with ABN's very successful UK Smaller Companies team where he covered engineering, transport and support services stocks.

 

In 2007, Phil joined Halbis Capital Management as a European equities analyst. He began writing for MoneyWeek in 2010.