Last week, the Unicorn AIM venture capital trust became oversubscribed in just seven days, despite a challenging market for VCTs.
The trust opened for offers for a subscription of up to £15m, plus a £5m overallotment facility.
In comparison, Enterprise VCT launched in October and closed in 81 days; Octopus AIM VCTs launched in September and closed in 98 days; and the British Smaller Companies VCTs took 149 days to fill.
While it seems the days of VCTs selling out in 24 hours are long gone, the seven-day sellout is certainly an oddity in the sector.
Unicorn claims investors have been attracted to its offering as it’s the largest and longest-running AIM-focused VCT, with net assets of over £215m.
Unicorn’s director of operations, Alisdair Hinton, said that the trust had seen backing from both new and existing investors.
He credited Unicorn’s overperformance to “our track record of outperformance”, noting that the trust had the longest track record of “any of our peers.”
However, the sector has struggled in recent years, especially in the AIM market, which focuses on smaller and less developed firms.
Of the six AIM VCTs on the market, the sector has seen an average 13.7 per cent decline over the last year. Only Unicorn’s returns have been positive, gaining 1.1 per cent, according to data from the Association of Investment Companies.
Figures over the last five years paint an even more dire picture, with the six funds falling an average of 0.7 per cent, with Unicorn once again being the only positive performer, gaining 29.6 per cent.
Across the entire VCT sector, only 22 of the 56 in the AIC database saw positive returns over the last year.
Despite their poor performance over the last year, VCTs have also seen rich investors flock to them, as Jack Rose, head of retail sales at Triple Point, said that people are “undoubtedly drawn to VCTs for the tax relief that they offer.”
VCTs offer up to 30 per cent upfront income tax relief, tax-free dividends and an exemption from capital gains tax on shares.
“Despite a more challenging year for fundraising, as compared to the previous couple of tax years, we are still expecting a strong end to the tax year,” Rose added.
“Beyond that we continue to see more and more new clients investing and a more year-round approach to VCTs, although Feb and March still remain the most active time for fundraising.
“All this points to a market that has evolved, matured and that VCTs have become a more embedded part of the advice and planning process for clients and advisers.”