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Venture capital works for investment trusts

Venture capital was the top-performing sector over the last 10 years across the whole of the investment trust industry in the UK.

According to latest figures from the Association of Investment Trust Companies (AITC), venture capital was the top-performing sector over the last 10 years across the whole of the investment trust industry.

The AITC's figures indicate that £1000 invested in the average venture and development capital investment trust a decade ago would now be worth £7,057.

Ross Marshall, managing director of Dunedin Capital Partners, told ii-q.com that the outlook for strong returns remains very positive. “Over the long-term venture capital is not adversely affected by economic downturns – many of the recent success stories originated through investments in companies in the early 1990s,” he said.

“The Government is also keen to encourage further investment in the venture capital sector. The Myners Report is due to report before the budget and we expect more incentives for institutions to invest in the venture capital sector. This will be good news for venture capital investment trust investors.”

Marshall is not the only leading figure in the investment trust industry prepared to throw his weight behind venture capital vehicles. Hamish Mair, fund manager of Martin Currie Capital Return Trust, takes the view that for both institutions and individuals a fund of private equity funds is a good way of gaining exposure to a high return asset class without making a disproportionate commitment.

“There are dozens of private equity funds being raised at any one time – all these appear at first sight to be good prospects,” he said. “In reality the strength of their proposition varies greatly. The fund of funds manager's role is to distinguish the wheat from the chaff in this specialised market.”

Source: www.ii-q.com, the connection for intelligent investors