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Written August 2004:
In contrast to the
situation in most quoted companies, private shareholders are the predominant
holders of shares in Venture Capital Trusts (VCTs). The United Kingdom
Shareholders Association (UKSA), as the main voice of private shareholders
in the UK, has commenced a campaign to improve the performance and corporate
governance of such investment trusts.
The historic
performance of VCTs has been very variable. For example for generalist
trusts founded in the years 1995 to 1997, the Total Return (net assets plus
dividends reinvested) ranges from 174.8 pence to 45.1 pence, from an issue
price of 100 pence. The worst case represents a negative annual return of
10.1%!
UKSA believes that
many underperforming trusts could be improved, and that the cost structures
of these funds needs careful examination and attention. We are also not
happy with the information provided in some cases to shareholders, which
does not enable shareholders to understand what is happening to their
investment. For a copy of an article published in our Newsletter in July 2004, see
VCT_Update_Article.
More information on
these problems, and our proposed solutions, has been documented in two
papers entitled “UKSA Report on Venture
Capital Trusts” and “UKSA Guidelines
for Venture Capital Trusts” (click on the name to access). For details
of campaigns on individual Venture Capital Trusts, go to the
Companies page of this web site.
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