VCTs to drop Axa Framlington
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The boards of the Axa Framlington Aim venture capital trusts (VCTs) are to change fund managers as they move away from investing in the Alternative Investment Market (Aim).
The decision was taken as the boards of the Axa Framlington Aim VCT and VCT 2 decided to change the investment strategy “given the disappointing performance of the Aim market”.
“Experience over the last few years has shown that Aim is not necessarily the best place for VCT funds with VCTs specialising in unquoted investments in general having offered better returns,” a market statement reported.
The boards expect to change manager to Downing from March 1, after searching for an Aim and unquoted investments specialist, switching from Axa Framlington. The funds’ former manager was given 12 months’ notice by the board in October; Axa Framlington has waived the final seven months’ worth of fees it was due.
The Axa Framlington Aim VCT will become the Downing Income VCT 4, while the Axa Framlington Aim VCT 2 will become the Downing Income VCT. (article continues below)
VCT manager Downing will raise additional funds and lower the annual fee to 1.8% and bring in an overall cost cap of 3%.
If investors approve the appointment the new manager will transfer around half of the qualifying investments into unquoted companies with “the potential to generate attractive returns”.
According to the boards, the sale of Aim assets will reduce the closed-end funds’ exposure to the “volatile” Aim market and include private equity-backed businesses.
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