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To maximise Total Return and provide investors with an attractive long-term tax-free dividend yield while maintaining the Company's status as a venture capital trust.
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I know this has a fairly static valuation pending any NAV update - but price doesn't seem to have changes since early December. Seems a bit odd. Also doesn't appear to be picked up in my yahoo finance - so shows as a 100% gain every day which is annoying!
Anyone else got any issues?
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@doze. Again I have to agree to certain extent. This all is the story we are fed with, and it is partly true. We live in hopes that the managers find the new ARM or Microsoft but unfortunately rarely do and iven if they do its gain is submerged by duds and fees. Even though am dissatisfied have to confess agree that the up front tax rebate and tax free income kindly given by our friends HMRC is a good incentive to invest nevertheless, with the knowledge that a proportion of our capital is helping new industry in UK. However I think it is a convenient strategy by the managers to charge the fees high enough to make them very rich, leaving only just enough for the investors to keep them "on-board". Particularly important now we are coming to Brexit to perhaps look at this kind of practice again and if proved wrong address the problems. Am surprised there are so few complaints like this, as am sure many others are aware they are being grossly over-charged. It all seems like a cosy cartel.
You are largely correct but I think underestimate the exciting low cap area in which they operate and the tax rebate is essentially a gift helping fund the inevitable failures, as you point out, it is immediately discounted in the sale price in open market. To participate in low cap with big potential,diversified, is reasonably low risk and the managers keep you informed on the companies in believable fashion info you don't get from other investments.
@doze. Agree with you, better than bank deposit but only because of multiple tax relief, at much higher risk. Up front tax relief disappears in the discount if sold before wind-up and any capital gains in high fees.. I find it a convenient excuse from VCT managers that they charge high annual fees plus 20% performance fee for only doing their job which they would do anyway when managing small Co. trust or private equity trust. Am not convinced that VCTs are not a gravy train for the aready overpaid retail fund management Companies, at investors expense.
better than bank deposits, 30% rebate plus 5% return p.a.. Diversified portfolio of small caps which are often unquoted and the vct management help them with follow up capital if required along with constructive advice. Often the company can be successful and generate such a return that it has to be sold to comply with percent of vct. Regular dividend and possible payouts encourages holding for long term, active involvement deserves the fees.
Again about the fees. The average VCT charges 2% per annum and 20% performance fee for a low hurdle rate. This can take 3 or 4% every year from the trust, compared to about 1% from a normal investment trust. On a simple basis, this equates to 30 or 40% decrease in capital and or income over 10 years, compounded, so is a lot worse and explains why very few VCTs at the end of, say, 10 years return the original capital, at best. The tax free income is the only bonus, but even this is devalued by the greed of the managers. Despite the generous tax breaks, I think investors such as myself get a poor deal unless higher rate tax payers. I just hope the Companies the VCTs invest in do better. Comments ?
as1983 - I agree that in the past it has been one of the better performers, but as I queried, what price tax-free dividends? Tax-payers and shareholders appear to be paying excessively for the fees and mediocre performance compared to other ITs. The directors are often on many similar boards but still get the same fees. I do not expect the capital and income of my long-term share based investments to decrease with inflation. Over, say, 10 years and more which is average holding period, we must be worse off. I think that like the so-called "absolute reutrn funds", VCTs are a very poor deal for investors.
being someone that bought in at 100p and one that fully expected it to go to this level after going ex-div I am not sure why you would not be "happy" with it diving down to 88p. Ultimately still in same position 88p plus 16p in divi in Jan. Fair point re fees etc but my understanding is that this VCT has quite a strong history of dividend payouts?
I would imagine the many investors who bought BSV for around 100p were not too pleased when the share price dived down to 88p.. Another questionable director decision to sell one of the constituent companies, and rather than reinvest at least some the proceeds distribute all of it as a special dividend to shareholders. OK if the SP was over 100p and kept up with inflation, but it does not, therefore in effect these VCTs are like annuities with fixed price at a discount to 100p. decreasing every year with inflation. Quite frankly, purely from the shareholders investment point of view, in my opinion they are very poor. Tax free income, but at what price? An outrageous near 3% total fees per annum reduces the gains substantially in addition to IFA and platform sales commissions when purchased. I just hope they provide the services to industry to warrant the taxpayers subsidy of these questionable structures. Excluding the directors and managers who appear to do very well, can anyone say anything good about these trusts?