LeggMason Investors is to launch a second Venture Capital Trust, which will predominantly invest i...
LeggMason Investors is to launch a second Venture Capital Trust, which will predominantly invest in Aim-quoted stocks.
The Aim VCT follows the group's Aim Distributions VCT and the start of the offer period is targeted for the 26 February 2001. John Johnston, director at LeggMason has already begun to choose companies into which the trust will invest.
The initial launch expenses of the VCT will be capped at 5% and the annual management charge is 2%. The trust is looking to raise £30m during the two offer periods.
The offer periods will straddle the 2000/2001 tax year and the 2001/2002 tax year. The first offer period is aiming to open on the 26 February 2001 and applications should be received by 2 April 2001. The close of the offer period for 2001/2002 is on 31 May 2001.
The minimum investment for each tax year is £3,000 and the maximum is £100,000. This £100,000 maximum allowance means that up to £200,000 can be invested per person over the two tax years.
Over the first three years of the VCT, 60% of the portfolio will be invested in smaller companies and 40% in new cash bonds to provide a level of stability.
Johnston said: "We are aiming for the final portfolio to have 70% in Aim or Ofex companies, 10% in unquoted companies that are in the last rounds of financing and 20% in straightforward small companies.
"This is a growth trust and accordingly 50% of the assets will be invested in qualifying and smaller companies at the earliest opportunity."
The idea is to have a portfolio people would choose to have regardless of the tax breaks, he added.
Johnson said: "The VCT will not be invested according to themes. If there is a sectoral bias it will be a result of the company meeting our investment criteria, rather than the trust following a theme.
"The most important thing when looking at a potential company is that it has stable and controllable loss margins. Growth rates are important but the stocks must be assessed for quality first. At present, there is a great deal of value in the smaller companies market.
"The extent of the enthusiasm in markets last year pushed share prices to unsustainable levels, particularly in technology-related areas."
The recent correction that the markets have experienced has been exaggerated and with the prospect of a Fed-engineered economic recovery coming through in the latter half of the year, there will be a large number of stock anomalies," he said.
According to Johnston, the next six months will see the nerves of the smaller companies market tested. However, Greenspan and Bush are working to the same end, which should restore consumer confidence, he added.
"The third quarter and fourth quarter will see a gentle upturn in the US, with the odd profit warning here or there.
Johnston has managed a number of smaller company and Aim investments.
He currently manages the LeggMason Investors UK Emerging Growth Unit Trust and LeggMason Investor Enterprise.
Johnston and his team act as investment adviser to the Aim Distribution trust, which has been running since 1996.
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