Should you risk buying into venture capital trusts (VCTs)?

Venture capital trusts (VCTs) are risky, but they are tax-efficient and focus on fast-growing private companies. David Stevenson picks a few to consider.

Tania Boler
Tania Boler, founder and CEO of female-health technology group Elvie, a VCT favourite
(Image credit: © Elvie)

US markets are replete with dynamic technology companies; Europe’s are staid and boring. Or so many investors think. But this is not entirely accurate. On the continent, for instance, tech companies now boast a bigger market capitalisation than banks and energy companies.

In Britain, on the other hand, investors seeking burgeoning, earlier stage businesses tend to go for the private firms found in listed portfolios such as the Chrysalis investment trust, which has been a top performer in recent years. However, there is also the long-established venture capital trust (VCT) sector. According to investment services group Wealth Club, these tax-efficient listed funds are increasingly investing in the same kind of fast-growing, valuable companies you’d expect to find in the Chrysalis fund and bigger rivals such as Baillie Gifford’s Scottish Mortgage trust.

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.