The Lemon Fool

This is first time I invested in VCT.
I opt for Octopus Titan VCT 2022/23 in Dec. It got 20% loss in 3 month time as per welathclub site.
Is this big loss common initially, and 'usually' picked up in 5 years time. I am aware no one knows for sure but asking people experience.

I seem to recall that Wealth Club reporting makes no reference to the tax rebate. You may want to think about how the investment will look when you get the tax rebate.

Opinion is divided on how the returns should be done. Personally I would always want to factor in the tax rebate.

I think the summary at the top of the Wealthclub page showing your investments will give the position both with and without the tax relief. Personally I don't like it when the VCT itself pretends that the tax relief is somehow part of its investment performance. OK it may be part of my return but it has very little to do with what they have done with my money (other than making sure they stick to the VCT rules - which I admit not all of them manage to do).
I invested in Octopus Titan in an earlier tax year and Wealthclub show me as down just over 17% but of course I have also had some dividends. I would not pay much attention to the capital values. I think they are based on share prices which will usually be at a discount to NAV and it is not as if there is a lot of share buying or selling for these shares. When you bought in to the shares it will have been at a premium to NAV so of course there is going to be an initial drop in the value of your investment.

The generalist VCTs revalue every few months so you can sometimes see lurch-like movements of this sort. (vs. public markets, and AIM VCTs, that move a little bit from day to day)

A drop in Net Asset Value of as much as 20% is not what I’d call “common” – but, not unusual in the context. First, these are not normal times. Growth businesses have been derated a lot. (See for example Schiehallion report yesterday – fall of 25% in NAV and 57% in share price drop). Second, Titan will value some companies on a 'most recent price paid' basis, so if a portfolio company raises funds at a lower valuation than in the heady days of (say) 2021, it can jolt the value of that holding downwards quite a bit.

But yes over a 5+ year horizon things often smooth out.

Remember this does mean your VCT will be making investments now at a reduced price compared to 2021. And there is still plenty of time for them to mature as well as for growth to re-rate a bit… I hope. I bought Titan in 2017 and am now eligible for buyback so I’m not thrilled at the timing of the NAV drop. But I've had decent divis over the years.

According to AIC website data Titan was the worst performing non AIM VCT over one year at -21%. There were big spikes in March & Sept 21 which have now appear to have been reversed.

The median loss from the universe of 61 VCTs was -3%. As Jim Slater once said "elephants can't dance".

This free AIC data is well worth a look.

127tolmers wrote:According to AIC website data Titan was the worst performing non AIM VCT over one year at -21%. There were big spikes in March & Sept 21 which have now appear to have been reversed.

The median loss from the universe of 61 VCTs was -3%. As Jim Slater once said "elephants can't dance".

This free AIC data is well worth a look.

Over a short timespan in a volatile market, such figures can depend more on the timing of revaluations than on underlying performance.

Having said that, Titan is by design a high-octane portfolio, investing in earlier-stage, higher-growth, higher-risk companies than most. That's an area where VCTs in the past have often failed badly, but Titan has produced some great returns for shareholders.

I'm out of it, mainly because of the high level of charges and lack of a hurdle for the manager's 20% bonus. But when it's dropped substantially, that sets up a hurdle, so buying now could be a better-than-usual deal.

Another NAV trim 4 April, post allocations, followed by an adjustment to new NAV. I didn’t know until I logged in to my Octopus portal.
Anyway, my application through Wealth Club was evidently at 77.9p v NAV 76.9p so that’s not bad. Managers 20% not going to happen now until they’ve returned something around 11p growth in NAV.

It seems Titan drop 23% with in one year. Any idea if it will rebound ?

octopus-titan-vct-suffers-disappointing-23%-total-return-loss-2022

sunnyban wrote:It seems Titan drop 23% with in one year. Any idea if it will rebound ?

Anything is possible (except accurate forecasts)!

I do not hold Titan (and sold out of my other Octopus VCTs years ago) so have not read their annual report.

I suggest that you need to understand how the loss has been made up.

It is quite probable that much of the loss is due to lower valuations where such valuations are made using listed companies' PE ratios. If they have gone down then Titan will have used lower multiples and thus reduced their valuations but that hasn't affected the companies profits, cash flow etc.

Other valuations, for example, those based on a recent funding round may have gone down as money gets tighter, but again, the underlying business may still be doing fine.

Some of the loss will be due to write-offs. These may increase as companies get to grips with higher interest rates and the current economic outlook. Hopefully those likely to fail will have been written down already so as to avoid future falls in valuations.

In summary, the valuations that have been lowered could recover, any exits will create absolute valuations, and any write-offs or failures will create permanent loss of capital.

thank you kidman !

Another dismal NAV valuation from Titan announced today.
How the mighty have fallen eh ?

barchid wrote:Another dismal NAV valuation from Titan announced today.
How the mighty have fallen eh ?

The Scottish Mortgage of VCTs? All-out growth investment in speculative and exciting companies!

Insofar as the analogy holds[1] ... SMT is still my biggest holding and showing a good profit on my original investment. Despite losing more than 50% from peak.

[1] Not in my portfolio comparing the IT sector's lowest charges with the VCT sector's highest! Haven't held Titan since I sold them to raise house-buying funds in 2019.

UncleEbenezer wrote:[1] Not in my portfolio comparing the IT sector's lowest charges with the VCT sector's highest! Haven't held Titan since I sold them to raise house-buying funds in 2019.

... and the longstanding reason to stay out of Titan is that no-real-hurdle 20% performance bonus.

But the fall from a 108p peak to today's 66p gives them a tactical hurdle of making me a 60% profit over five years if I invest now. Or would do, if it were based on share price as opposed to NAV total return. Does anyone happen to have the latter relevant figures to hand?

NAV down to 62.4p and lower interim dividend.

https://www.londonstockexchange.com/new ... n/16381158