Industry Voice: Looking for diversification? Consider VCTs

Venture capital trusts have a number of characteristics which allow them to complement a wider portfolio, says Puma Investments' Nadia Halila

clock • 1 min read
Nadia Halila, Puma Investments
Image:

Nadia Halila, Puma Investments

Venture capital trusts (VCTs) act as a strong diversifier to conventional equity and bond portfolios, because the investee companies have different dynamics from large FTSE companies.

Different VCT providers can also target different sectors and different risk profiles. Some will aim to provide high-capital growth but with more risk, while others will target a steady tax-free dividend stream. They will also hold companies at different stages of development. 

Nadia Halila, senior business development manager at Puma Investments, says: "Like most VCT providers, we're often used alongside other VCTs. Advisers don't usually pick one fund for an investor.

"There are very clearly diversified VCTs in different sectors, different stages and how many holdings they've got. If an investor is spread across two, three, four VCTs, that will help to mitigate risk." 

That said, Halila argues that VCTs can be less volatile than people believe. She points out that the Puma portfolios have generally done well during the pandemic, in contrast to listed markets, which have been volatile.

While VCTs may invest in smaller companies, the VCT manager will be providing help and guidance on growing the business, which can help it avoid many of the pitfalls that might derail it.

Puma invests in scale-up businesses rather than start-ups, because that is where its managers believe they can add the most value, and also help minimise risk for investors.

For more on the benefits of investing in VCTs, read Puma's exclusive Spotlight guide

More on Economics / Markets

Inflation and financial planning — focusing on the bigger picture

Inflation and financial planning — focusing on the bigger picture

Well-informed advisers can better guide their clients through turbulent times

Adam Leci
clock 07 June 2024 • 5 min read
More than half of IFAs feel negative about a potential Labour govt

More than half of IFAs feel negative about a potential Labour govt

Advisers favour Conservatives when it comes to their clients and business

Isabel Baxter
clock 09 May 2024 • 2 min read
Elections and advice: Planning in political and legislative uncertainty

Elections and advice: Planning in political and legislative uncertainty

‘It should not be based on speculation, always plan on current legislation’

Isabel Baxter
clock 08 May 2024 • 3 min read

In-depth

Multi-asset sentiment indicator: Interest up for small and mid-caps

Multi-asset sentiment indicator: Interest up for small and mid-caps

'The consensus outlook for inflation and interest rates has shifted'

Paul Ilott
clock 12 June 2024 • 8 min read
Deputy Editor's View: Will technology truly bridge the advice gap?

Deputy Editor's View: Will technology truly bridge the advice gap?

The deputy editor's Friday Night Takeaway from 7 June

Jenna Brown
clock 07 June 2024 • 1 min read
Editor's View: Another BSPS-related business goes into administration

Editor's View: Another BSPS-related business goes into administration

The editor's Friday Night Takeaway from 31 May

Hope Coumbe
clock 31 May 2024 • 1 min read