An article published on UK financial website This Is Money highlighted the advantages of investing in venture capital trusts. Jeff Prestridge said in his article that due to the recovering economy, attractive income, huge tax breaks, and low interest rates many taxpayers are being persuaded to mull over placing its hard-earned money in such trusts.
Venture capital trusts are defined as investment funds listed on the stock market that allows investors to bet in a fledging UK business portfolio. Shares of the trust, should they perform well on the stock market based on its portfolio businesses' successes will have trust managers exit from their stakes at a profit. This, in turn, will generate profit for investors, said the article.
London-based financial adviser Bestinvest managing director Jason Hollands said these trusts are the ultimate play in the recovering British economy. Hollands added, "As recovery picks up, more small businesses look to expand and seek finance. With corporate bank lending squeezed, many turn to venture capitalists for funding. This explains why we are seeing many trusts raise funds at the moment, providing plenty of choice for investors and an opportunity for them to invest in a renaissance Great Britain."
The risks associated with the investments are offset by tax breaks, which are considerably big. Available on investments up to GBP200,000 in the current year, an investor could obtain an income tax rebate of GBP3,000 per GBP10,000 investment, provided that the investor holds his shares for a minimum five-year period.
The article also said investors could tap into the trust's existing portfolio such that the portfolio is already ensured to generate a robust dividend stream. Investing on venture capital trusts also allows investors to spread their risk by betting on various trusts, of which would generate a generous monthly income percentage.
Managing partner Patrick Reeve, whose company Albion Ventures offers this option, said, "Not only are we providing investors with a monthly dividend payment but exposure across the six trusts to 75 unquoted businesses operating in sectors as diverse as cutting edge technology, healthcare and renewable energy."
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