VCT charges & discounts
The charges taken by VCT managers vary considerably, but as a broad rule of thumb annual charges are often about 3%, and initial charges about 5% (although we will discount these often by up to 4%). The managers are obliged to disclose charges in the prospectus; however they are not as simple and transparent as a unit trust.
As well as initial and annual charges, managers usually apply performance fees, and some will allow 'sweet equity' deals for the individual managers, where they 'co-invest' their own money on the same or perhaps even better terms as the VCT itself. Another way VCT managers can make money is from charging the underlying company for the services of the VCT manager. While the charges are complex and are a secondary issue to the skills of the manager, we believe it is an important differentiating factor and useful in determining the motivation of the manager. We are using our influence in the marketplace to encourage managers to align their interests with those of their clients.
Important information
Please remember, VCTs are higher risk and should only be a consideration for those who can afford to take the risk, their value will fall as well as rise. You should hold them for the long term, but you could still get back less than you invested. Please remember, the value of tax savings will depend on your circumstances and tax rules can change over time.
