Northern Venture Trust and Other VCTs

Northern Venture Trust (NVT) recently published their Annual Report. It shows that the manager (now Mercia) collected a performance fee of £2.5 million which on my calculation raised the overall fees and expenses as a percentage of closing net asset value to 4.5%.

This is way too high in my opinion even allowing for the work involved in managing a portfolio of small, unlisted investments. When launched back in 1995 Northern did not have a performance fee but it was added later despite the opposition of myself and many other shareholders.

There is of course no evidence that performance fees in investment trusts improve performance

I will be submitting a question and comments to the AGM on the 7th January on this issue and I would encourage other shareholders to do the same. It would be best to remove the performance fee. Other VCTs such as the Amati AIM VCT do not have one and they outperformed Northern last year in terms of Total Return.

VCTs are a perpetual problem in relation to excessive management fees, poor corporate governance, and general behaviour prejudicial to the interests of shareholders. Shareholders in the Edge Performance VCTs and Core VCTs should vote in support of campaigns for change – see https://www.sharesoc.org/campaigns/edge-vct-campaign/ and https://www.sharesoc.org/blog/vcts/core-vct-another-messy-vct/  . Note: I have never held shares in either of those VCTs but they are typical examples of problems in VCTs over the years.

Oddly enough a person who shall remain nameless has suggested that ShareSoc has become more active in campaigns against incumbent management since I departed as I was often too sympathetic or supportive of management. This is a gross distortion. Just considering VCTs, the following is a list of VCTs where I made representations or ran full blown campaigns while I was a director of ShareSoc or UKSA in the last 25 years:

Acuity VCT, Albion VCT, Baronsmead VCTs, Bluehone VCT, British Smaller Companies VCT, Chrysalis VCT, Downing Income 3 VCT, Foresight 1+3+4 VCT, Murray VCTs, Northern Venture Trust, Oxford Technology VCTs, Rensburg AIM VCT, Singer & Friedlander VCT and Quester/Spark VCT (some have since changed their names).

In some cases, this resulted in major board changes and changes to the fund manager. The results were positive in most cases which shows how important it is for shareholders to take action when things are going wrong.

It is good to see that since ShareSoc was founded 10 years ago by me and others it has become more active recently in promoting campaigns against companies. With a new Chair they are also seeking a new General Manager to take the organisation forward.

I wish them the best of luck in the New Year as it is certainly important for ShareSoc to continue to increase membership to act as a representative voice for private shareholders.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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