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It only hours to go before the end of the tax year, many investors will be scrambling to make sure they are not missing out on any tax relief like ISA allowances or venture capital relief.
Many of these allowances are “use it or lose it” – which means you can’t carry over unused allowances into future years. So, to help investors navigate that last minute rush, here’s a guide on some venture capital trusts (VCTs) you should keep on your radar and three last minute funds for your ISA.
Three last minute funds for your ISA
Jonathan Moyes, head of investment strategy at Wealth Club shares his views on three funds he is holding in the Wealth Club Portfolio Service.
Comgest Growth Europe Ex UK
Growth Europe Ex UK fund ranks 36th largest in its Investment Association sector, so it won’t be a well know name with most investors. But for Moyes, that’s exactly what makes it attractive.
A “hidden gem investing in high quality European businesses”, the Paris based Comgest has been running the same quality growth investment philosophy since 1985. During that time, it has built a long term track record within its flagship European mandates.
The firm has around €30bn under management and an investment team of 49 investment professionals. Over 90% of staff have equity in the business, helping it to retain its best staff and plan for the long term.
Over the five years to March 2024, Comgest Growth Europe ex UK returned 90.3% versus the peer group average of 59.7%.
Twentyfour Monument Bond Fund
An alternative to run of the mill fixed income funds offering an attractive yield, the Twentyfour Monument Bond Fund invests in investment grade asset backed securities (ABS) and is managed by the specialist ABS team at Twentyfour Asset Management.
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It primarily invests in residential mortgage-backed securities (52.1%) and collateralised loan obligations (31.0%). Over half (52%) of the portfolio is held in AAA rated issues or cash, a further 21% is held in AA rated issues.
Despite the underlying quality of these assets, with historically low levels of capital losses and defaults, the market still appears to be affected by recent stresses in the banking sector (Silicon Valley Bank/Credit Suisse) and the forced redemptions from pension funds in the wake of the Truss mini-budget. The result, according to Moyes, is an “unusually high yield” compared to conventional investment grade bonds.
The fund should therefore offer investors an attractive yield (7.0% as at 29 February 2024), is sensibly priced (0.38% OCF), and comes with a specialist ABS team which is essential in this market.
T. Rowe Price US Smaller Companies Equity
A US small companies fund that helps you invest beyond the magnificent seven, T. Rowe Price US Smaller Companies Equity boasts a pool of smaller, but no less dynamic, companies.
Its largest holding, Teledyne Technology would place it within the top half of the FTSE 100 (^FTSE) with its $20bn (£15.83bn) market cap.
The fund provides exposure to small and mid-sized companies in the US, covering many that are missed by a simple S&P 500 index tracker. T Rowe Price manages just under $100bn in the space, and the funds are supported by one of the largest analyst teams in the world.
T. Rowe’s US mandate – US Small Cap Core – a similar mandate to the one available in the UK, hasn’t underperformed the Russell 2000 over a rolling 10-year period since 1995.
Over five years to March 2024, the T Rowe Price US Smaller Companies Equity fund (C Acc) has returned 85.7% in sterling versus 52.3% for the Russell 2000 index.
Three VCTs to keep your eye on
Wealth Club alone saw £1.7m of VCT investments in the last three days of the tax year in 2023 and this time shouldn’t be any different. Here are three to consider, according to Nicholas Hyett, investment manager at Wealth Club.
Maven VCTs
Venture capital investing is risky, and Maven actively looks to manage that risk. It does that through investments in more mature companies operating in defensive or counter-cyclical sectors, as well as deal structuring and portfolio diversification. The VCTs have an average of more than 100 underlying holdings.
Molten Ventures VCT
Managed by one of Europe’s most established venture capital firms, the VCT usually invests alongside parent Molten Ventures Plc. That pedigree has given the VCT access to some of Europe fastest growing businesses, notably ‘Thought Machine’ which was valued at more than $1bn at its last investment round.
Pembroke VCT
Pembroke’s portfolio includes a mixture of tech and business services, but it has particular expertise in consumer exposed businesses. Its largest holding, LYMA recently saw its medical-grade beauty laser voted one of the best inventions of 2023.
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Hyett said: “The tax year end always leads to a bit of a last minute rush as investors look to make the most of tax reliefs with annual allowances – things like ISAs, Pensions and Venture Capital Relief. Many of these allowances are “use it or lose it” – which means you can’t carry over unused allowances into future years (or the carry over is limited).
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