Amati Aim Vct Share Chat (AMAT)

Quite incredible how this fund invested so consistently in badly performing companies. I think the only reason for it not falling more is its cash! Two years ago this fund was seen as market leading, fair to say it was a false dawn.

This VCT has had a dire 8 months now. The pain keeps coming. Dividend will soon be paid but it will be 4.5p compared with 7p last year. As dividends are based on NAV then this will almost certainly fall further.

Just when one bad month finishes another one starts with this one. It is relentless, pretty much all the stocks they hold that once were stars have been hammered. Day after day.

Geez so many of the stocks Amati holds have fallen fast. Tristel, Polarean, Maxcyte, Frontier Developments, AB Dynanics, Ilika, even now Keywords is 30% off highs. I know it's a long game but been a rotten 6 months. Maybe timing of new offer will allow people to get in at a better price or maybe the sell off of the small cap tech stocks will continue.

Pyueck
I think I'll sell some in Feb when my 6 months lock in from previous purchase ends, not because I've lost faith, I haven't, but I have quite a few I could "recycle" thus selling and waiting another 6 months seems a sensible move for me.

Yet another top up offer! I took the last one and whilst I love Amati it's definitely been a tough 4 months since then. First was the dive of Polarean, then it was Frontier Developments. Other stock which have done incredibly over the last 5 years have also pulled back less spectacularly, namely Maxcyte, Leaning Technologies and Tristel. Annoying there haven't been many huge winners to offset these, Water Intelligence has still had an incredible year but the gains have petered out too in recent months.
I shouldn't be too surprised or disappointed, many of these companies have done incredibly well in the longer term. More disappointing is the under-performance vs the wider AIM market which has largely held up.
So maybe this new offer is tempting, getting in to Amati at the 180p rather than the 210 mark it was a few months back. Let's see where we are in February. I went in pretty hard with the last top up so can't put too much more in this tax year. Always nervous investing in VCTs too early in the tax year, if for whatever reason I lost my job I would not be able to use the tax benefits so don't really want to go hard on 2022/23 just yet, even this is allowed in the new top up offer.
I was planning on selling some old Amati shares which have had the 5 year mark expire, but doing so would prevent me taking up this offer due to the 6 month rule.

I am meriting that sort of comment with a response.

PYUECK
Stocks go up, stocks go down, the pool that Amati vct fishes in is by definition a very volatile pool.
As Frontier are still more than double Amati's cost so after your 30% rebate from HMRC they are actually 3 times cost, I really do not see why a 4p reduction in Amati vct SP, or a trifle over 2% is anything to complain about, or are you so smart that you only ever buy stocks that go up ?
Please enlighten me, I am most interested.

Another stock with a 35% dive, on top of polarean. Is Amati's Midas touch ending?

6.5% fall in amati. Hardly surprising given that their largest holding Polarean imaging fell over 60% on news that the FDA has not given approval. I guess all part of the fun of investing.

A new top up offer on the way from Amati. The performance and dividends to date have been great so planning on another top up however worth noting that:

- As you can only offset the 30% tax break against income in the current year, investors need to be cautious of investing in August. If ones income was to unexpectedly be lower for the rest of the tax year (e.g. lose job etc.) then you may not be able to use all of the tax break you had. For this reason I will only be investing enough to have a tax break which would be my tax bill were I to lose my job at the end of October. Due to the way the tax system works (i.e. a banded system) this reduces my allowance A LOT, however it would suck to invest in a VCT and not be able to use the benefit and I can always invest later in the year if I need to in another offer.
- 6 months rule. I am now heavily invested in Amati VCT. I also used to invest in Maven, but quite honestly their performance, feed and dividends have sucked and beyond diversification I just can't look beyond Amati. The Amati portfolio is pretty diversified anyway. However one issue is this rule that you can sell old VCT shares even after 5 years of holding, if you have invested in new issues of the shares. This is a bit annoying for me, however come next February I should be able to sell my old shares with no issues and use these proceeds for next years issue (will act straight away after the 6 months to sell as will need another 6 months before I can purchase again).
- Valuations. Amati has had a great run, and when you look at the companies many of the valuations seem toppy. I have given up trying to call the market though, my strategy is clear, buy VCT's, hold for at least 5 years, take the dividends, sell and reinvest.

I'm very happy with that!

Proposed final dividend of 7p (10.5p for the year)

@Pyueck
Interesting your thoughts re valuations, in a recent video Dr Jouardan touched on that himself by pointing out that UK valuations were roughly half that of US ones. I agree with you a lot do look toppy to me too but this fund manager is someone I have always found who talks sense.
I invest in this vct simply because it has done me very well indeed over the last 8 years or so.

The next Dividend is soon to be announced. The fund has a strategy of 5-6% Dividend based on last years NBV. Therefore I assume this dividend will be based on last July's NBV and wont be a huge increase, but hopefully future ones should be significantly higher (if the NBV is maintained). I am all in favour of the fund paying as much as they can out in dividends, the performance has been great to date but some of the valuations of their holdings, especially in software, look very toppy to me.

@smose
Me too !

I got my confirmation this evening. It didn't make any difference to the timing of submission as long it was received before the closure of the application. I only received 40% allotment.

I did apply online by wealth club not realising they were open over the weekend, duh !
However it looks from their email this week that we will only receive about 40% for applications of £10k or more with the minimum allotment being £4k.
I am surprised it has taken them this long & still we don't know for sure what we have, 2 weeks later after WC opened their online service.

@barchid - did you submit directly online?
I applied via wealth club on Friday evening. They pre-warned that the subscription was likely to be over-subscribed and even advised that I should 'get into the queue' as soon as the application is opened at 5pm (Wealth club did not load until 6pm), as they would submit on a first-come-first serve basis to the registrars, ready for Monday morning.
We just have to wait for a couple of days. I note that Amati VCT price dropped by 1.5% today, so hopefully will have lower net asset value on the day of issue of these new shares.

Smose
I did mine this morning, about 09.20 online so I keep my fingers crossed !
Certainly never thought it would go this fast ! A very short time span to raise £7m...

Yes signed up. You will also be able to watch after if you can’t make it.

If you google" bright talk amati "you will see a link to Dr Jourdan of Amati giving a review of his portfolio in the vct.
It starts at 11.00 on Feb 18 for an hour

Replying to - "have you considered leaving the Amati VCT for the tax-free dividend as permanent source of income, instead of recycling from other VCTs (for the benefit of the 30% rebate)?"

Unfortunately I don't have enough spare cash to constantly be taking out enough VCT's every year to largely cover my tax year without selling old one's once they are 5 years old. As this is the case it always seems prudent to sell old VCT's and buy new ones (not the same one within 6 months as not allowed) and get another 30% tax rebate. Yes the sale and purchase fees (especially difference between NAV and share price) probably knock a good 10% of this benefit off (plus the time and hassle of selling VCT's and buying new ones) but still worth it.
If I had enough cash I would happily invest my £200k allowance every year in VCT's and never sell them. Unfortunately I'm not in that position.

You also have to assess if AIM shares/Amati especially have already had a very good run, for instance in Sep 2018 I topped up in their offer & paid 182.98p, then an all time high, fortunately 5 months later Feb 2019 I averaged and bought some more in their offer at 143.2p then again in Nov 19 at 149.75.
Is buying them in the new offer going to be ringing the bell at the top again ?
Hard to know, probably not as they are heavy in health care & tech but with AIM it is hard to predict....

the 3 aim vcts I mentioned all seem to have recent stable track-record of giving 5% dividend/year, without eating into the fund capital, so could form a basis for regular tax-free income. One advantage is the lack of liquidity and large discounting do not matter any more.

have you considered leaving the Amati VCT for the tax-free dividend as permanent source of income, instead of recycling from other VCTs (for the benefit of the 30% rebate)?

Thanks for the recommendations will look into. I have to admit I find vct’ a little addictive, already invested a fair amount this tax year but always think if I have spare cash and enough tax that I have paid which can be offset against the 30% rebate, why not just buy this year and start the 5 year clock ticking. Trouble is now I have Amati vcts from 5 years ago which I can’t sell as can’t sell within 6 months of a purchase of the same VCT. My last purchase was in November 2020, so if don’t take up new offer then I can sell these around May, but if I take up new offer this will go back to closer to October. Then I think...don’t sell until after the dividend....
My aim was to get into a position where I was using dividends and sales of old vcts to fund the new ones, so ideally I would get tax rebates without actually using more of my own cash. I should have diversified more, but increasingly felt that some of the other vcts seem to just favour their fees over keeping up dividends and the share price so in last few years have just invested in Amati. Also got some in Maven which have been ok, but nothing compared to Amati and they have recently cut dividends which really sucks.

@smose
I think you will find HH vct offer is now closed ?
As to Unicorn yes their NAV performance has been good but look at the discount to NAV it often trades on, recently 18% which is a result of them not having a discount control mechanism. So when you sell you give up a lot of your tax benefit.
@Pyueck
Amati target a 5% divi and tend to top slice their best performers to pay it, so it is a safe bet that providing the NAV stays at or above this level 2021 divis will be rather higher than last year.

PYUECK
Earlier this year I was responding to some of your posts with a somewhat cautious attitude as to where Amati vct was going with a major loss on the personnel front, however 10 months later I am happy to have been proved wrong, the Edinburgh team of Dr Jourdan have made some exceptionally canny investments this year, well worth reading the facr sheet which came out this week. I am now a much happier holder than I was before, for what it's worth !

TeelaBrown. I am still on my VCT journey. My strategy is to invest annually in a VCT and then sell after 5 years and use the proceeds from sales, dividends and tax rebates to reinvest without further capital outlay. To be honest I don't overly look into what the VCT is investing into as I gave up a long while ago thinking that I had any talent picking which companies or sectors will do well going forward. Much more important to me is whether the VCT has paid regular dividends with a good yield.

The 30% tax rebate and tax free dividends are great. Yes with VCT's you get fleeced with a variety of fees, but in my experience while outrageous, don't outweigh the tax benefits.

I hear a lot of 'experts' say that VCT's are risky and that you shouldn't buy somebody just because of the tax benefits. Yes they are risky, but I have not found them any more risky than other shares, and which other share pays you a 30% cash rebate upfront and all dividends being tax free? As to whether somebody should buy something just for the tax benefits, well you will have to make up your own mind on this, but I would say that it I do and haven't regretted it so far! A lot of other vanilla shares which I thought were set to be winners have done a lot worse!
I have invested in Amati and Maven VCT's. Amati has done really well and Maven has done not so well. Both are still well in profits though when tax rebates, dividends and current NAV are taken into account. I do find though that once you have 5 years of VCT's on the go the level of dividends can be pretty impressive.
I don't have any non-VCT AIM stocks and to be honest can't see why I would invest in any AIM stocks not through a VCT? I don't think I have any special ability to pick winners so don't see the point.

After 40 years of investing I've finally taken my first position with a Venture Capital Trust.

I've been quite heavily invested in AIM listed individual companies for a decade. It would be nice to say that these investments have all flourished, however, this is not the case. Several of the individual companies have crashed and remain little more than ash in my portfolio; some have simply gone bust. Despite these setbacks, several have produced significant returns that have more than compensated for the losses.

I had read that some AIM shares were eligible for EIS tax relief. I explored the possibility of getting some tax back on my holdings only to find that this was only possible at the point the shares were issued.

I was unable to find an EIS fund that suited my purposes but did find a small number of VCT's investing solely in qualifying AIM shares.

My view was (is) that Amati has the best prospects from this group so this is where I've invested.

I'm happy to put my money into a fund, holding several Investment Trusts.
I'm happy with a minimum hold of five years having held several individual shares and trusts for far longer.
I'm happy with investing in AIM: my new exposure to Amati will be around 3% of my AIM exposure.
I'm happy to diversify my holdings
I'm really happy to get a 30% rebate on my investment.

Like Pyueck I intend to invest annually and sell after five years to maximise the tax benefit. I'm not sure if all of my follow up investment will go to Amati, one of the other AIM VCT providers or into generalist VCT's

If you've any views on this as a strategy or recommendations as to further VCT investing, I'll be glad to read them.

PYUECK
I take your point about not trying to pick individual stocks, let alone in AIM, but the trend since Doug Lawson left has been less encouraging.
My take on VCT's is similar to yours, I also like Hargreave Hale VCT, very similar to Amati but can not have such a high % as Amati in single stocks, with Maven as a traditional VCT & Albion as asset backed, renewables etc to balance the holdings. The real question is how the new rules will affect vct's longer term but my guess is they will do OK for us....

Hi, Yes I did put in my application on the 13th December. I take your point about some investments not working out but overall I am fairly happy with how Amati has performed once dividends are taken into account. Of course the performance in H2 2018 was a big disappointment, but overall pretty happy.

Personally I now try to not get too hung up on the performance of individual shares, I gave up a long time ago believing that I had a special talent to pick stocks better than the market and am cynical when anybody else claims they do! I am happy with VCTs if they give me my 30% tax break, around a 5% yield and then allow me to sell after 5 years for roughly the investment cost. I am trying to spread my VCT exposure across a few trusts, but currently overexposed to Amati.

Totally aware that VCT charges are outrageous and also that there are real risks involved but so far investing every year in a VCT and then recycling every 5 years has worked well for me so far. I intend to go on with this approach and believe long term its not a bad strategy.

PYUECK
Did you invest in some post election ?
I did but am wondering if I did the right thing, since Doug Lawson has gone to run his own start up the managers seem much better at buying than at selling; look at Accesso for example, down from £30 to £3.42 in 15 months, it has gone from a major holding to a modest holding in our portfolio, not because the managers sold a lot, they may have sold a few, but the change in size is because of the decimation of the share price, despite the company putting themselves up for sale, a CEO change 2 years ago, I could go on but won't.
I think if you look at the currently dismal performance of many of their recent purchases one can only conclude that either the new rules are making life very difficult for them, (in which case why are they currently looking to raise a further £25mill ?), or are they better at buying than selling stocks these days ?
I fear the latter is more true, which is sad as they used to be so much on the ball, but they do now seem to have lost their mojo.

Yeah doesn't surprise me that a lot of investments are outside the UK, crazy really as UK government giving tax breaks to support young non UK businesses. On the IPO's more like the UK government giving tax breaks to allow company founders to get away with making a fortune on overpriced IPO's.

I invest in VCTs for one reason....the tax breaks. Every article says you shouldn't do this, quite frankly think this is rubbish, with a VCT 30% tax break on investment, tax free dividends, the investment can perform pretty poorly and still will be ok. People say VCTs are very high risk, well so are all shares!

I hope we get a nice BOJO majority, but no idea, bookies have it about 3/1 that JC will be PM as we are tucking into our Turkey....or probably being required to serve carbon neutral nut roast at the refugee welcome centres. Therefore for me until I know that wont be the case my money in firmly staying in cash. My VCT application will go in the post at 3am on the way to the Conservative Party Central Office celebrations.

I understand how you feel but the other side of the coin is that if you invest, & the shares are issued just before the election, which they surely will do under the circumstances, you have your 30% & tax free divis as Steptoe would have great difficulty in retrospectively removing what you paid for as per prospectus. Worth noting too that at their AGM a few months back they said how much revenue of the companies they invest in comes from overseas, my memory was it was about 1 third each between UK, EU & rest of world (mainly US). It surprised me but that was pretty much what they stated.
So well diversified for a VCT.My major worry is that they seem to have a habit of going in for AIM IPO's/placings & see the stock collapse in the aftermarket (velocys, i-nexus & loop up) are 3 especially illuminating examples of that. Are they losing their touch since Doug Lawson left ?

Pretty depressing that the annual fees are 2.1%. Doesn't sound bad for a year or two, but over 20-30 years these fees destroy value. Even a VCT held for 5 years will see over a third of the tax rebate lost in the annual fees, not to mention the application fee and the discount one will need to accept between the NAV and the share price when one sells after 5 years.
I still like VCT's for the 30% tax rebate and regular tax free dividends but still...the fees on the product are crazy. Why cannot somebody bring out a really simple VCT that just invests in a pool of AIM companies but has lower fees.

PYU
You make very reasonable points, if we do suffer Corbyn many things could happen, not the least of which could be a "haircut" of larger personal bank accounts (think Greece, it has happened!). The one point I would differ on is that the loss of tax free divis could impact the resale value of VCT's as it is the major reason anybody would buy them on the secondary market.
I would suggest that the largest buyers on the secondary market, by far, are the companies themselves buying them in to control the discount.
I think you are correct to be cautious, but in the scenario you paint, what is safe ?

Thank you barchid for your opinions. I agree that in usual circumstances I think any changes to tax rules should only impact future periods, but who knows in the current climate.
Even if this years tax rebates are safe, I think the tax free status of VCT dividends are definitely not safe. This could seriously impact the resale value of VCTs as this is the major reason why anybody would buy a VCT on the secondary market.
Personally I have never really found VCTs or ISAs exactly defensible from a 'are they fair' perspective. I don't really understand why investors should get a tax rebate for investing in AIM shares through a VCT but not by directly investing. VCTs which invest in AIM shares actually don't really fund smaller companies as they almost always buy the shares on the secondary market and not directly. Also why not give a 30% tax incentive and tax free dividends to anybody starting a company, I know there is entrepreneurs relief but this isn't as generous as VCTs which seems odd to me. I like VCTs as they save me lots of tax, but I would struggle to argue convincingly that they actually help small businesses. They definitely allow fund managers to charge fees that they would never get away with if there wasn't a 30% tax rebate. I would personally like the whole VCT and AIM system kept just as it is because I think its largely unknown great tool to avoid paying income tax, but that doesn't mean I think they are morally right or effective!
On ISAs I think they are very unfair the way they are set up. They effectively mean that the tax free allowance on non-earned income is dependent on a) have you consistently had enough spare cash each year to use your ISA allowance b) whether you have been in a position to never withdrawn money in an ISA and c) your age (the longer you live the more years of potential ISA allowances you have accrued). I personally think when you step back they are regressive and totally illogical way of determining peoples tax free allowance for non-earned income. They favour richer older investors. They penalise people for using their money when they really should be incentivised, such as buying a house, as you will lose the allowance unless you put the money back in the same period.
I see both VCT's and ISA's therefore as regressive and favour those with large amount of wealth they don't need to touch over those with more sporadic earnings or changes to their circumstances.
Still they are the rules we have and if used effectively can be extremely beneficial to the extent of enabling people with earnings under around £200k a year to pay next to no income tax. I suspect Labour would therefore reform both VCTs and ISAs.

I understand your fears but I would suggest that it would be very difficult to retrospectively change the tax status, but with Corbyn one can never say never.
I suspect that if there were to be an election current open offer vct's would issue the shares on the day of the election so they definitely came under the current rules.
Also I would think it is more likely that McDonnell will think of stopping new payments into ISA's (many more of them) and vct's do create jobs by funding smaller companies. I am not totally sanguine about the situation though, as the current nonsense in Parliament displays on a daily basis, but do bear in mind that there was a thorough review by the treasury about 3 years ago comparing EIS & VCT's which culminated in the new rules

I for the past 5 years have invested in VCT's around Christmas time so that the purchase is all complete in time for my tax return which I complete soon after tax year end.

Is anybody else a little bit nervous this year? What if by April time Corbyn is in power? I see VCT's as something he is sure to clamp down on pretty fast as he will see them as tools by the rich to pay less tax.

Does anybody know if legally any Labour clampdown could impact on the ability of VCT investors to receive their tax rebates for FY19/20 or would it only be from FY20/21 that could be impacted? I also suspect he would remove the tax free status of VCT dividends.

If Corbyn did scrap the tax benefits on VCT's what would be the impact? Would most VCT's wind down, either immediately or after 5 years.

Appreciate the answers to these questions are more likely to be opinions only, but still good to know what other people think.

For me I am going to hold off until a general election has been held before investing, unless there hasn't been one until next February when I will just have to just hope for the best but invest less than usual.

I absolutely agree, it pays good dividends and invests in the sort of companies which could do very well, but you need to know a lot about these companies, which they do.
I like Hargreave Hale vct as well, their discount management seems better than Amati's, I am surprised that more people aren't involved in them both.

Yes Amati is one of three VCT's I regularly invest in. It's a decent VCT and has performed well and distributes good dividends.

The fees, like with all VCT's are pretty high, both on application and annual management charges. However the application fees are not too bad as they are reduced to 1% by being an existing investor or investing through a broker although you still lose around 7% when you buy as the VCT trades around 7% lower than the NAV.

My strategy with my VCT's is simple, buy them, claim the 30% tax allowance and dividends and then sell them after 5 years and put the money towards new VCT's and another 30% tax allowance. If one was really bold and had a lot of spare cash one could pretty much get to a position where they never had to pay income tax again if they continually recycled VCT's every year up to an amount to reduce their tax liability to zero. I am not there yet but it's nice to get a big amount in my bank every tax return I do.

My Amati VCT has performed well, however under no illusion that this may not continue (and the past 6 months have been pretty bad) and the annual management fees of around 2% mean that another 10% is wiped off my profits when I hold them for 5 years.

As a small investor we prefer to invest in companies such as AMATI as we would otherwise not be able to invest in so many young companies. Amarti and similar ITs have the ability to dig deep in to these tiddlers and select those who they feel have a future. The SP does vary a lot but in the end these small companies generally give better returns than the FTSE 100 big boys. AAM, ESO and FFWD are companies we feel give us a wide coverage, No where else could we invest in the Cannabis medical market as FFWD does. Amarti have a wide range of investments which in time will bring a bigger share price. Their experience far out strips our knowledge of AIM / small companies which is why we shall be adding to our investment in them, especially with their SP quite low and below NAV which is an asset when dividends are declared, which gives an increase in the %.