19 / 92
19
GENERALIST VCTs
Generalist VCTs focus on investing in a
broad range of unquoted companies.
The management identify small
companies looking for investment they
think have excellent growth prospects
and this can be viewed as a private
equity style investment.
Their strategies can vary. Some invest
in early stage companies, providing
‘development’ or ’expansion’ capital and
seeking high returns. Others will use a
mixture of loans and equity, looking for
more secure opportunities, or possibly
asset backed opportunities, and
sacrificing potential returns in exchange
for lower levels of risk. Others simply
look for larger, better established firms
to invest in, with less risk and a more
stable return profile.
SPECIALIST VCTS
Specialist VCTs operate in the same way
as Generalists, but focus on investing
in niche areas where the management
team has experience. Examples of
industries that Specialist VCTs have
focused on include media, technology
and renewable energy.
AIM VCTS
As the name suggests, AIM VCTs focus
on investing in companies that are listed
on the Alternative Investment Market,
the junior market to the London Stock
Exchange. These VCTs are closer to
traditional stock market based funds.
LIMITED LIFE VCTS
Limited Life VCTs (sometimes known
as Planned Exit VCTs) aim to give their
investors a much more defined exit
soon after the five year minimum
holding period. These tend to be more
conservative funds with a focus that is
as much about capital preservation as
it is about growth, and for this reason
they may use loan notes in conjunction
with equity investment.
TYPES OF VCTs
Although all VCTs are structured as Investment Trusts and the types of investments that they can make are all governed by the same
rules, they still have a very broad universe to invest in. As a result there are several different varieties of VCT to choose from.
OBJECTIVE
BENEFITS
INVESTMENTS
GENERALIST
GROWTH
by investing in
small unquoted
firms
DIVERSIFICATION
across a broad
universe of
opportunities
EQUITY
AIM
GROWTH
by investing
in small firms
quoted on AIM
Additional
TRANSPARENCY
&
LIQUIDITY
EQUITY
LIMITED LIFE
CAPITAL
PRESERVATION
& GROWTH
by making investments
with defined exits
DEFINED EXIT
shortly after
qualifying holding
period is over
EQUITY &
ASSET BACKED
LOANS
SPECIALIST
GROWTH
by investing in
small firms in a
particular industry
Benefit from
SPECIALIST SKILLS
&
TECHNICAL
KNOWLEDGE
EQUITY