Investment Focus
The VCT with an Edge
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RISK WARNING
The value of an investment in Edge Performance or any other VCT may go down as well as up and you may not get back the full amount invested. An investment in a VCT may be higher risk than investing in other securities listed on the London Stock Exchange’s official list and may be more difficult to realise. You should not invest in Edge Performance or any other VCT unless you have carefully thought about whether you can afford it and whether it is right for you. You should regard an investment in Edge Performance or any other VCT as a longer term investment. We recommend that you seek independent financial advice from an appropriately authorised independent financial adviser as to whether an investment in Edge Performance or any other VCT is suitable for you, as well as your personal entitlement to any tax reliefs associated with an investment in a VCT. The share price of a VCT may not reflect its net asset value.
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Edge Performance VCT seeks to allow investors to take advantage of VCT tax reliefs whilst combining:
- high targeted returns;
- downside risk protection; and
- liquidity.
Edge Performance VCT allows investors access to the entertainment and media sector through a manager with specialist expertise, whilst minimising the risks often perceived as being associated with the sector.
The first specialist VCT to target this sector, Edge Performance VCT is now in its sixth year and has so far raised nearly £90 million for investment in entertainment and media businesses. Edge Performance VCT is managed by Edge Investment Management, a leading specialist entertainment fund manager.
The Entertainment & Media Sector
The state of the economy has remained very much at the forefront of public thought and debate in the last 12 months, as the UK seeks to emerge from recession. Whilst a great deal of uncertainty still remains in the broader economy, data from the last year shows that, although consumers have been more careful with their money, they have continued to spend on quality entertainment.
- The live music sector, which cannot be reproduced or pirated because it is about the entire experience and not just the music, bucked the economic conditions and grew in 2009.
- West End theatre, with similar strengths, reported its seventh consecutive year of record figures for both attendance and revenue.
- Subscription TV, driven by exclusive sports, HD programming and most recently 3D programming, posted strong increases in revenue and subscriber bases.
- Broadband subscriptions, music streaming services and other content-driven businesses continued to increase sales, defying the prevailing economic wind.
The Economic Background
The current economic conditions favour this kind of venture capital fund.
For the investor:
Current savings rates are typically below inflation, and income tax on interest earned means that most savers are unlikely to see the return of the real value of their capital.
Following a review, the current Coalition Government has announced its intention to reduce the amount which individuals can invest in their pension, both on an annual basis and over their life.
These factors, together with the introduction of the 50% income tax rate, and the abolition of the personal allowance for anyone earning more than £112,950 per year, will tend to make a tax-efficient investment structure, such as a VCT, more attractive.
For businesses:
Bank lending has contracted over the last 18 months and with many having encountered difficulties in renewing loans, an equity investment which comes with the expertise and connections of an established industry specialist, and which lessens exposure to volatile bank finance, is similarly very attractive.
The Opportunity
Past performance data across the venture capital industry show that many of the best performing funds were raised and invested in times of economic uncertainty, like this, when deal expectations were muted.
As a result, Edge believes that the present environment will offer good opportunities to invest in entrepreneurial businesses on attractive terms in the entertainment and media sector.