Shareholders consider the ability to support growing UK businesses and the dividend yield resulting from that growth as significant factors, alongside tax relief, when investing in VCTs, according to new research commissioned by private equity fund manager YFM Equity Partners.
The research, carried out by FWD Research, surveyed over 1000 YFM shareholders to discover their reasons for investing in VCTs. Unsurprisingly, 90 per cent of respondents said that they chose to invest in VCTs primarily due to the tax relief on offer. However, 75 per cent also identified dividend yield as a key driver behind this investment, and nearly half (45 per cent) said they chose VCTs in order to support growing UK businesses. Amongst investors under 60 years old, 54 per cent opted for VCTs as an alternative to their pension fund.
David Hall, Managing Director at YFM, says: “It is incredibly encouraging that our shareholders identify supporting small UK businesses dividend yield and as two of the top reasons for investing in our VCTs. The team at YFM is incredibly proud of our ability to help grow smaller UK business into larger, more profitable enterprises and, as a result, support the UK’s economy. It is welcoming to see that our shareholders also value this element of their VCT investment.
“Of course, it is this growth in small businesses which drives the dividend yield and YFM has an impressive track record in this regard. Our two VCTs, BSC and BSC2 have produced a dividend yield between 5 per cent and 15 per cent over the last five years, with the growth rates differing depending on where each investment is in its growth cycle. As with any long-term investment, VCTs can be a volatile ride in the short-term, but, as our shareholders have seen, those who are patient, certainly reap the rewards. We are delighted that YFM’s investors recognise the additional value of these investments and look forward to strengthening our VCT funds in the next few months.”
