What is ‘Venture Capital Trust – VCT’
A type of publicly listed closed-end fund found in the United Kingdom. A venture capital trust is designed as a way for individual investors to gain access to venture capital investments via the capital markets. Its mandate is to seek out potential venture capital investments in small unlisted firms to generate higher than average risk-adjusted returns for its investors.
Numerous venture capital trusts are listed on the London Stock Exchange.
Explaining ‘Venture Capital Trust – VCT’
Venture capital trusts are tax-advantaged investments in the United Kingdom, often relieving investors of many of the tax implications surrounding dividends and capital gains, or offering lower taxation rates.
Typically, they are bound by regulations to the percentage of funds that must be allocated to qualifying investments, or holdings, along with timelines for capital injection loans and investments outside of those held in said qualifying holdings. However, the majority of VCTs aim to invest a large majority of their funds with the goal of achieving higher risk-adjusted returns than other investments available in the market.
Further Reading
- Short-run price performance of venture capital trust in initial public offerings – www.sciencedirect.com [PDF]
- Taxation influences upon the market in venture capital trust stocks: theory and practice – www.tandfonline.com [PDF]
- Is Venture Capital Performance Affected by Recessions? Evidence from the UK Venture Capital Trust Scheme. – search.ebscohost.com [PDF]
- The structure, governance and performance of UK venture capital trusts – www.tandfonline.com [PDF]
- Study of the impact of Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) on company performance – ore.exeter.ac.uk [PDF]
- venture capital trust (VCT) – www.elgaronline.com [PDF]
- The structure of venture capital funds – books.google.com [PDF]
- Financing entrepreneurs: Better Canadian policy for venture capital – search.proquest.com [PDF]
- Public venture capital: missing link or weakest link? – www.inderscienceonline.com [PDF]
