Review: Unicorn AIM VCT

Archived article

Archived article: please remember tax and investment rules and circumstances can change over time. This article reflects our views at the time of publication.

There is one thing that strikes you when you listen to Chris Hutchinson, the lead fund manager of the Unicorn AIM VCT. He has a gift for “telling it how it is”.

The way he describes his approach to selecting AIM stocks across his portfolios is a case in point: “Over 20 years, what I’ve learnt more than anything is that it’s not so much about getting the ones that go up tenfold, but more about avoiding the ones that will blow up. You can only do that if you take a cautious approach, buying proper businesses with profit and cashflow.”

Through thick and thin

Mr Hutchinson applies broadly the same approach to all the funds he runs, from this VCT to the highly regarded Unicorn Outstanding British Companies fund.

His commitment to “proper businesses” has stood the test of time. Notably, when markets have wobbled (AIM is particularly prone to this), the VCT has held up well comparatively. The result is a strong long-term track record. Please remember, past performance is not a guide to the future.

What does a “proper business” look like?

Mr Hutchinson describes a “proper business” as one selling products or services that deliver a tangible benefit to customers in a growing market. He doesn’t like highly geared businesses. Instead, he favours ones that already generate cash or have the potential to do so. He also prefers it if the management team has retained a meaningful equity stake.

Abcam, the VCT’s largest holding, ticks all those boxes. Unicorn invested in 2005, when it listed on AIM. Since then, the value of the holding has grown tenfold and the company has been paying increasing dividends for over 10 years. Across the portfolio (more than 80 VCT-qualifying investments) around 40% of the companies are forecast to pay a dividend in the next 12 months.

The combination of growth and income to date has allowed the VCT to pay regular progressive dividends to its shareholders (£59.5 million in aggregate since launch). As dividends are not paid from capital, they should be more sustainable, although there are no guarantees and past performance is not a guide to the future. AIM can be a volatile market and your capital is at risk.

Source: Unicorn Asset Management. Past performance is not a guide to the future. Total return of the VCT shows net asset value and cumulative dividends to 31 December 2018. Dividends are variable and not guaranteed.

Risks: important

This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice. 

VCTs are high-risk so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. They also tend to be illiquid and hard to sell and value. Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks. 

Tax rules can change and benefits depend on circumstances.

Unlike VCTs investing in unquoted companies, AIM VCTs have a more natural exit route for shares as they are listed. However, dealing in large volumes of shares could be difficult. The size of the VCT could make this more of a problem.

AIM shares can be very volatile and could suffer extreme volatility if the market falls sharply. The difference between the buying and selling price of AIM-listed companies is often wider than those listed on the main market. 

What to consider next

Please visit the offer page to download the provider documents, read more (including risks and charges) and apply online.

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.

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