Alternative Investments: One way or another (FT Advisor)

by Geordie Clarke

Infrastructure India lost 64 per cent, while its peers like International Public Partnerships returned 11 per cent and HICL Infrastructure Company returned 12.7 per cent.

This, Mr Maltin says, is because infrastructure funds are popular assets and the share prices are being pushed up as a result. “It’s at a premium because the yields are high and everyone is searching for yield,” he says.

Yet another area to explore is venture capital trusts (VCTs) and enterprise investment schemes (EISs). Puma Investments is a VCT manager owned by Shore Capital and offers limited life VCTs, which allow investors to gain immediate benefit of the structure’s tax reliefs. Eliot Kaye, director of Puma Investments, says the fund invests in debt and runs for a five-year period. He says the VCT structure, because of the 30 per cent tax break, makes it a viable alternative to traditional pensions for those with more wealth.

He says with maximum annual pension contributions continually being reduced, most recently from £50,000 to £40,000, there is an appetite for capital preservation through tax-efficient investments like VCTs. “I think that’s where the market is going to go,” Mr Kaye says. “More people are going to see these as a place to preserve capital.”

One advantage of the VCT structure is that it is regulated by the FSA and can therefore be recommended to retail clients. Mr Kaye says many of his investors come direct, but a large number also arrive via IFAs who have clients in need of an alternative asset.


See full article on the FT Advisor website.