Venture capital trusts in shake-up

Some 19 venture capital trusts (VCTs) have changed manager over the past year, almost a fifth of the total, according to research from the Association of Investment Companies (AIC).

The majority of changes were due to management buy-outs among VCT groups. For instance, seven VCTs managed by Close Brothers transferred to Albion Ventures after the buy-out of Close’s venture capital division led by MD Patrick Reeve, while Aberdeen Asset Management’s four VCTs are now managed by spun-out Maven Capital Partners.

Annabel Brodie-Smith, a director at the AIC, comments, ‘Management buy-outs have been a key theme of 2009 amongst a number of VCT fund management groups, and it’s also been interesting to see mergers perhaps creeping up the agenda, albeit mergers within management groups.’

The AIM-quoted VCT sector has outperformed others over the past six months, with share prices increasing 21.8 per cent compared to a 1 per cent rise for generalist VCTs. However, it is still lagging over longer periods, with a plummet of 64.4 per cent over ten years compared to a rise of 11.3 per cent over the same period for the generalist sector.

Adds Brodie-Smith, ‘The short-term outperformance of the AIM VCT sector reflects the rally that [smaller companies] have experienced overall, and it will be interesting to see if this rally continues.’

VCTs benefit from tax advantages such as tax-free dividends, which are not accounted for in the performance figures above.