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“Poor quality of information, manager’s track record and the economic sector were the top factors
that providers believe would make an investor or an adviser hesitate about investing”
Poor quality of information, manager’s track record and the economic sector were the top factors that providers believe would
make an investor or an adviser hesitate about investing. Advisers noted the complex investment process as their number one factor,
perhaps indicating an area that VCT providers can improve on. Acceptance on adviser platforms may address this.
Providers believe that investment risk, lack of liquidity, lack of transparency and fear of investing in a non-mainstream asset class
are the biggest concerns when investing in a VCT. While investment risk was the top concern amongst advisers, liquidity and lack of
transparency were also noted: once again it appears that the providers understand advisers’ concerns.
Not many providers had suggestions to improve VCTs, but the ones that did suggested changing the regulations on the secondary
market and allowing investors to claim income tax relief, as well as bringing maximum annual investment amounts in line with EIS.
We asked the same of advisers, and while they noted the shorter holding period, additional tax reliefs and larger investment limits,
providers added the rise of online platforms to this list.
WHICH 3 FACTORS ARE MOST LIKELY TO MAKE AN INVESTOR/ADVISER HESITATE ABOUT
INVESTING/RECOMMENDING A VCT?
WHAT DO YOU THINK ARE INVESTORS/ADVISERS TOP 3 CONCERNS WHEN INVESTING IN A VCT?
IN YOUR OPINION, WHAT SINGLE CHANGE OR INNOVATION WOULD IMPROVE THE VCT MARKET?
WHY DO YOU THINK THE EIS SECTOR HAS RAISED OVER £12.2 BILLION IN FUNDS COMPARED TO JUST
OVER £5 BILLION IN THE VCT SECTOR?
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Top factor
2nd top factor
3rd top factor
Complex investment process
The forecast level of return
The forecast timing of the exit
The manager’s performance track record
The economic sector the fund is exposed to
Poor quality of information provided on the fund
Previous poor experience with the manager
Poor third party reviews
Other
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Top concern
2nd top concern
3rd top concern
Investment risk
Lack of liquidity / concern that deal flow may dry up
Too expensive
Lack of transparency / Too hard to understand
Fear of investing in non-mainstreams assets
Fear of investing in tax avoidance schemes
Too hard to explain to clients
Too much regulatory risk
Too much due diligence required
Other
29%
14%
57%
14%
14%
43%
14%
29%
14%
29%
43%
14%
14%
14%
29%
14%
14%
14%
43%
29%
29%
14%
14%
29%
29%