Venture capital trusts (VCTs)
Very similar in structure to an investment company; VCTs are a form of closed-ended fund that offer generous tax benefits to encourage investors to invest in venture capital.
VCTs have to meet certain conditions and require approval by HM Revenue & Customs. In return, investors who invest in them are entitled to various tax reliefs.
VCTs were launched in 1995 as a type of collective investment fund to encourage private investors to invest indirectly in small mainly UK higher-risk trade companies, not listed on the official list of the London stock exchange, which need start-up or expansion capital.
VCTs are complex investment products and are only suitable for sophisticated investors. Investment strategies employed by VCT managers differ enormously.
For more information on VCTs please read the AIC factsheet.
Details of the AIC VCT sectors and their definitions can be found in AIC Sectors.
For more details on the rules governing VCTs and investor tax relief on purchases prior and post to 6 April 2006 see the HM Revenue & Customs VCT guide.
Volatility
A measure of the tendency of a market/share price to vary over time. There are several ways to measure volatility, but the most common method used is the standard deviation. Standard deviation measures the extent to which a value, such as the share price, has varied around its average level during a past period. The higher the volatility of the values, the higher the standard deviation will be. Standard deviation is often used as a measure of investment risk.
