Why invest in the secondary market given the income tax benefits of new launches?
The most frequently cited top reason cited for investing in the secondary market was tax-free dividends, which can be higher in an established VCT (36%), followed by the fact that buying on the secondary market allows investors to invest in a mature portfolio (31%). Stuart Veale, Manager, ProVen & ProVen Growth and Income VCTs commented: “Many established VCTs have the potential to pay very high levels of tax-free dividends out of the proceeds of selling the investments in their maturing portfolios. Private investors are missing out on these potentially attractive returns because of the lack of an effective secondary market.” Similarly, Alastair Conn, Managing Director, NVM Private Equity Limited, said: “The VCT sector is maturing rapidly, with a number of well-established funds now showing they can maintain an attractive tax-free dividend yield. This is a compelling message but we have to make sure we get it across loud and clear to investors and their advisers.” Indeed there was a fe
