The insupportable burden of VCT management charges

VCTS

Management fees double investor risk, are tax inefficient and mean that less of an investor's capital can be put to work

If venture capital trusts (VCTs) totalling £2bn are raised by the end of this tax year, management fees alone will approach an annual £40m. Unsurprisingly, investors and market commentators are wondering if value for money is being achieved, and how returns to investors are being affected. The answers are uncomfortable reading for most VCT managers - as well as shareholders, who carry the burden of a highly inefficient, expensive, and distorting structure. Operating costs, of which the biggest element is management fees, mean that: • Investors' capital at risk effectively doubles. Manager...