Oliver Bedford, Investment Manager, Hargreave Hale AIM VCTs.
2014 was a good year for fund inflows into AIM VCTs, which rose from £15m to £50m. In contrast, AIM had a poor year, returning -18%. Despite this, the AIM VCTs posted an average return of 1.45%, ahead of the FTSE 100 and considerably better than AIM.
The events of 2008 and 2009 cast a long shadow over AIM and its VCTs: funds were consolidated, managers moved on, lessons were learned and strategies were adjusted. 7 years have passed since those dark days and we feel the refined AIM VCT proposition that has since emerged is stronger and more robust. Many AIM VCTs now have mature portfolios generating strong risk adjusted returns.
There are many factors that define a good company: the quality of the management team, intellectual property, competition, cash flow and balance sheet strength, new and emerging technologies or markets. Taken together, these define your risk and reward as an investor. The one thing that does not define a good company is its listing status.
And what about AIM? AIM is a deep pool of opportunity; it is a market that hosts many vibrant, dynamic and exciting businesses with potential for material growth. Risk is abundant but AIM VCTs offer investors access to this opportunity through an experienced manager and a structure that, through the tax reliefs, both acknowledges and compensates them for the additional risk.