Fundraising in the VCT sector for the year up to 31 December was 53% higher than during the same period the year before figures show, with some £169.5m raised compared to £110.8m in 2015.
The AIC said the increase in interest in VCTs reflected the early VCT offers launched in 2016/17, consistent demand for VCT offers until the end of 2016 and support for VCT dividend reinvestment schemes.
Ian Sayers, chief executive at the AIC said: “The pension rule changes and reduction in the lifetime allowance have clearly acted as a boost to investor interest along with its established track record both from a growth and income perspective. “It is hard to predict what the final fundraising total will be for 2016/2017, as managers come to terms with recent rule changes. But what is not in doubt is that demand for VCTs remains strong.”
However, the popularity of VCTs does mean the best offerings could sell out fast as there isn’t an endless supply, according to Richard Troue, head of investment analysis at Hargreaves Lansdown.
“VCTs are raising more this year than last, but that doesn’t mean there’s an endless supply, and the best offerings typically sell out fastest, so investors should act quickly to avoid disappointment,” Troue said.
“In a world where ultra-low interest rates and falling bond yields have squeezed traditional sources of income, VCTs therefore offer a tax-efficient alternative for investors who already have more mainstream income portfolios.”
