Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to gadjet,niord,88V8,Wasron,PeterGray, for Donating to support the site

VCT dividend returns in my portfolio....am I in the ballpark correct?

Sophisticated and complex high-risk tax-sensitive investments in small companies: handle with care
Artistxman
Posts: 28
Joined: September 22nd, 2017, 12:01 pm
Has thanked: 9 times
Been thanked: 7 times

VCT dividend returns in my portfolio....am I in the ballpark correct?

#452153

Postby Artistxman » October 22nd, 2021, 8:15 am

Hi all

I quickly did a calculation of the dividend received against my VCT holding and this is based on October 2020 to October 2021. The below return is what I calculate?

Baronsmead Albion NVT Octopus Titan Mobeus I&G BSC Proven Amati Hargreave Maven
8.10 4.10 13.68 5.36 12.61 3.24 5.26 6.16 2.41 3.65


Looks like Northern trumps everything else and Octopus Titan doesn't seem great- but I see some enthusiastic posts for Octopus Titan and also BSC. Did I miss some massive dividend in my calculation or may be my time frame is not the right one?

Thank you

Artistxman
Posts: 28
Joined: September 22nd, 2017, 12:01 pm
Has thanked: 9 times
Been thanked: 7 times

Re: VCT dividend returns in my portfolio....am I in the ballpark correct?

#452154

Postby Artistxman » October 22nd, 2021, 8:17 am

Sorry can't seem to copy paste a table from excel and the numbers are not aligned to the VCT names...

Boots
Lemon Pip
Posts: 62
Joined: August 1st, 2021, 2:51 pm
Has thanked: 52 times
Been thanked: 39 times

Re: VCT dividend returns in my portfolio....am I in the ballpark correct?

#452174

Postby Boots » October 22nd, 2021, 9:30 am

I can't directly answer your question for a number of reasons:

i) I only hold three of your VCTs (Proven, Amati and Maven [but which one?]). I don't see any abnormal payments for any of those over your period.
ii) My accounting skills are rudimentary, at best.
iii) My accounting period aligns with calendar years, not October - October.
iv) I use the Net Cost to determine Yield, not Gross Cost, or NAV, so my numbers will probably not match others, but they work for me.
v) Finally, in this disclosure of my dodgy accounting, I look at the annualised yield since inception, not discrete years.

If you were able to recast your data to calendar years you could look at the AIC data for comparison.

Good luck!

Artistxman
Posts: 28
Joined: September 22nd, 2017, 12:01 pm
Has thanked: 9 times
Been thanked: 7 times

Re: VCT dividend returns in my portfolio....am I in the ballpark correct?

#452178

Postby Artistxman » October 22nd, 2021, 9:41 am

Boots wrote:I can't directly answer your question for a number of reasons:

i) I only hold three of your VCTs (Proven, Amati and Maven [but which one?]). I don't see any abnormal payments for any of those over your period.
ii) My accounting skills are rudimentary, at best.
iii) My accounting period aligns with calendar years, not October - October.
iv) I use the Net Cost to determine Yield, not Gross Cost, or NAV, so my numbers will probably not match others, but they work for me.
v) Finally, in this disclosure of my dodgy accounting, I look at the annualised yield since inception, not discrete years.

If you were able to recast your data to calendar years you could look at the AIC data for comparison.

Good luck!


Thank you, I am also a bit rudimentary in my skills and relied on my automatic bank statements which runs for 12 months- so will redo the analysis for January(I struggle though with this approach as some VCTs start paying dividend when I buy this year and I tried to exclude them for the return calculation)...

Good point about comparing to AIC data- thank you

Boots
Lemon Pip
Posts: 62
Joined: August 1st, 2021, 2:51 pm
Has thanked: 52 times
Been thanked: 39 times

Re: VCT dividend returns in my portfolio....am I in the ballpark correct?

#452190

Postby Boots » October 22nd, 2021, 10:40 am

Artistxman wrote:I struggle though with this approach as some VCTs start paying dividend when I buy this year and I tried to exclude them for the return calculation)...


Ah, yes! Me too.

In my somewhat schizophrenic, chuck everything into the Excel food processor and see what comes out, approach, I have handled these in two ways, for two different purposes. One is to declare these, and the Tax Rebate, as Year Zero gains to be taken off the Gross Cost as an Adjusted Net Cost (often the Dividend will be received before the Tax Rebate). The other, which is I suspect is more proper, is to take off the tax rebate to give a Net Cost, but book in the Dividend in the year it becomes due - and therefore results in a Yield figure. In that first year that Yield might be quite low, but I just live with it.

Work in Progress is approach three (which won't give a Yield, but an annualised Total Return). This to build up a dated list of Costs and Receipts to allow an XIRR calculation. This is probably the best quality data I can derive, allowing me to discard the first two approaches, but will require quite a bit of data processing. I haven't yet decided how I would feel without a Yield figure. I recognise that the Yield is more significant than Total Return until the point you sell the VCT (should that ever happen).

If only I were an accountant!

sinterklaas
2 Lemon pips
Posts: 148
Joined: December 13th, 2016, 10:07 am
Has thanked: 62 times
Been thanked: 51 times

Re: VCT dividend returns in my portfolio....am I in the ballpark correct?

#452853

Postby sinterklaas » October 25th, 2021, 10:19 am

Artistxman wrote:Did I miss some massive dividend in my calculation or may be my time frame is not the right one?


Don't think you missed a Titan dividend in that specific time frame but the interim, plus an 8p special, is on its way shortly.

UncleEbenezer
Lemon Half
Posts: 7652
Joined: November 4th, 2016, 8:17 pm
Has thanked: 1069 times
Been thanked: 1902 times

Re: VCT dividend returns in my portfolio....am I in the ballpark correct?

#452891

Postby UncleEbenezer » October 25th, 2021, 12:02 pm

VCT yields are not really a useful figure. Very high yields are routinely generated by return of capital, and capital values fall far more often than they rise - hence most VCTs are below the £1 launch price (in some cases even after multiple rebasements). Income is good, but lacks the relative reliability the HYP folks seek, and benefits from more active management than a HYP.

All this is a consequence of VCT rules. VCT dividends are tax-efficient, and a better way for investors to realise profits than selling at a discount. And when there's a profitable realisation in a portfolio, it's much easier for management to pay a special divi than to re-invest the proceeds.

Artistxman
Posts: 28
Joined: September 22nd, 2017, 12:01 pm
Has thanked: 9 times
Been thanked: 7 times

Re: VCT dividend returns in my portfolio....am I in the ballpark correct?

#461186

Postby Artistxman » November 26th, 2021, 2:40 pm

UncleEbenezer wrote:VCT yields are not really a useful figure. Very high yields are routinely generated by return of capital, and capital values fall far more often than they rise - hence most VCTs are below the £1 launch price (in some cases even after multiple rebasements). Income is good, but lacks the relative reliability the HYP folks seek, and benefits from more active management than a HYP.

All this is a consequence of VCT rules. VCT dividends are tax-efficient, and a better way for investors to realise profits than selling at a discount. And when there's a profitable realisation in a portfolio, it's much easier for management to pay a special divi than to re-invest the proceeds.


Agree and hence I was looking at the NAV increase through my portfolio and attaching the returns here(next step is figuring out a way to combine the dividend return and NAV increase in one place- any suggestions welcome). The below estimates combines different years and so probably not the best or accurate description of the return by year, will post that properly soon:

investment investment (sub) profit / loss
Mobeus VCTs 23.88
Octopus Titan VCT 14.73
The Income & Growth VCT 13.38
Northern VCTs 8.56
Amati VCTs 8.16
British Smaller Companies VCTs 8.04
Mobeus Income & Growth VCT plc 7.09
ProVen VCTs 5.85
Albion VCTs 3.62
Hargreave Hale AIM VCTs -0.99
Maven Income & Growth VCTs -1.78
Baronsmead VCTs -5.11
Pembroke VCT -6.43
Octopus AIM VCTs -7.24

Boots
Lemon Pip
Posts: 62
Joined: August 1st, 2021, 2:51 pm
Has thanked: 52 times
Been thanked: 39 times

Re: VCT dividend returns in my portfolio....am I in the ballpark correct?

#461193

Postby Boots » November 26th, 2021, 3:05 pm

Artistxman wrote:
next step is figuring out a way to combine the dividend return and NAV increase in one place- any suggestions welcome


I certainly don't have a definitive answer - despite having put quite a bit of effort into this task.

If you have the raw data, the best I have been able to do, is a dated list of cashflow movements (purchase cost, tax rebate, dividends, trail commission rebates and finally an entry for current value [NAV, or price someone is prepared to pay you, or some other value - you choose]) and then use XIRR to produce a single combined percentage return. But it is quite laborious to produce and maintain.

A simpler, but very effective, measure is where I record all the details of purchase price, tax rebate and dividends in a simple year by year table - there I can calculate Yield and Total Return (which I chose to annualise). But that is not worth looking at until the first year has passed - the numbers are just silly before that.

I think it is key to decide what is important to you (for example I think yield is an important metric, but some others do not), to also decide how you want to value a share you hold. Finally it is important to decide how much effort you want to put into maintaining these data.

I hope that helps.

Artistxman
Posts: 28
Joined: September 22nd, 2017, 12:01 pm
Has thanked: 9 times
Been thanked: 7 times

Re: VCT dividend returns in my portfolio....am I in the ballpark correct?

#461234

Postby Artistxman » November 26th, 2021, 4:36 pm

Thank you- yes sounds very complicated. I just would like to see which ones are the best(both in terms of NAV and dividend return historically) and make choices based on diversification and performance. Anyway, here is the proper NAV growth list as of 26th Nov 2021 and credit goes to Wealthclub portfolio view(which is downloadable):

investment (sub) profit / loss
Northern VCTs 2019/20 28.3
Mobeus VCTs 2019/20 23.88
Octopus Titan VCT 2020/21 17.48
Octopus Titan VCT 2019/20 15.91
The Income & Growth VCT 13.38
Octopus Titan VCT 2018/19 12.77
Octopus Titan VCT 2017/18 10.92
British Smaller Companies VCTs 2020/21 9.28
Northern VCTs 2018/19 7.64
Mobeus Income & Growth VCT plc 7.09
Amati AIM VCT 2020/21 6.4
British Smaller Companies VCTs 2018/19 5.96
ProVen VCT 5.85
Baronsmead VCTs 2020/21 4.68
Maven Income & Growth VCTs 2020/21 4.6
Albion VCTs 2020/21 3.98
Albion VCTs 2019/20 3.26
Hargreave Hale AIM VCT 2020/21 2.57
Maven Income & Growth VCTs 2020/21 -1.51
Hargreave Hale AIM VCT 2021/22 -4.29
Maven Income & Growth VCTs 2019/20 -4.42
Baronsmead VCTs 2018/19 -4.48
Maven Income & Growth VCTs 2021/22 -4.64
Northern VCTs 2017/18 -6.29
Pembroke VCT 2021/22 -6.43
Hargreave Hale AIM VCT 2021/22 -6.85
Octopus AIM VCT & AIM VCT 2 2021/22 -9.18
Baronsmead VCTs 2017/18 -18.79

UncleEbenezer
Lemon Half
Posts: 7652
Joined: November 4th, 2016, 8:17 pm
Has thanked: 1069 times
Been thanked: 1902 times

Re: VCT dividend returns in my portfolio....am I in the ballpark correct?

#461283

Postby UncleEbenezer » November 26th, 2021, 8:18 pm

Artistxman wrote:Agree and hence I was looking at the NAV increase through my portfolio and attaching the returns here(next step is figuring out a way to combine the dividend return and NAV increase in one place- any suggestions welcome).


The VCTs helpfully publish NAV total return figures in their reports. NAV now, NAV last year, dividends paid over the year. That gives you a figure for one year's NAV return[1]. Right now returns are strong, so maybe 10% for something middling. Adjust by dividing the raw figure by your preferred measure of inflation. And if comparing to other investments, adjust dividends by your would-be tax rate on them.

Multiply individual year returns to get return over a longer period. So if it were 10% this year but -10% the previous year, that's a less than happy two-year return of 0.9*1.1 = 0.99, or -1%. Etc.

If you participate in dividend reinvestment, that gets your actual total return figures (as with any other investment). If not, it's still the fairest representation of performance: you personally have more income and less asset.

This is complicated by takeovers and mergers, when performance history tends to get lost, and a manager may be inclined to hide a loser under a winner. And of course you also need to take care with lesser events such as rebasements.

[1] Substitute share price if you prefer.

Artistxman
Posts: 28
Joined: September 22nd, 2017, 12:01 pm
Has thanked: 9 times
Been thanked: 7 times

Re: VCT dividend returns in my portfolio....am I in the ballpark correct?

#470897

Postby Artistxman » January 6th, 2022, 4:37 pm

I reviewed the dividend returns at the end of December and my list changed a bit and so wanted to post an update in case folks made decisions based on my earlier post. Major caution as advised by others, it doesn't show the NAV and capital growth. But in my view dividend return is useful for some as there are tax benefits in there as well and it's returned in cash(if you opt for cash).

So here goes the list at the end of December from my portfolio which started in 2017/18:


Div return

NVT 13.68
Octopus Titan 10.41
Baronsmead 8.10
Mobeus I&G 7.85
Amati 6.74
BSC 5.71
Albion 5.65
Proven 5.25
Maven 3.65
Hargreave 2.60
Pembroke 2.45
Octop Aim 1.53

njdl
Posts: 1
Joined: July 26th, 2020, 4:49 pm
Been thanked: 3 times

Re: VCT dividend returns in my portfolio....am I in the ballpark correct?

#473038

Postby njdl » January 14th, 2022, 11:52 am

I also have struggled with this matter. The only methodologically sound approach is to calculate an IRR for each share, but that is too much like hard work. I have been investing in VCTs for about 15 years and over the last 10 have kept a record of all dividends. I calculate annually a “yield” (defined as the total of divis divided by the total purchase price) and a “capital gain/loss” defined as the market value less the purchase price net of the tax benefit. Over the last 10 years I have achieved an average annual “yield” of 9% tax-free and a cumulative “capital gain” of 30%. Before anyone tells me, I accept that these figures are methodologically meaningless, but they serve to comfort me that my money has not been entirely wasted. It is notable that in my case the capital gain is entirely down to AIM VCTs (Octopus and Unicorn), which fortuitously make up a large part of my portfolio. Without exception all other VCTs are showing a capital loss, some amazingly so (take a bow Quester 3, now King’s Yard).

Artistxman
Posts: 28
Joined: September 22nd, 2017, 12:01 pm
Has thanked: 9 times
Been thanked: 7 times

Re: VCT dividend returns in my portfolio....am I in the ballpark correct?

#473131

Postby Artistxman » January 14th, 2022, 5:48 pm

njdl wrote:I also have struggled with this matter. The only methodologically sound approach is to calculate an IRR for each share, but that is too much like hard work. I have been investing in VCTs for about 15 years and over the last 10 have kept a record of all dividends. I calculate annually a “yield” (defined as the total of divis divided by the total purchase price) and a “capital gain/loss” defined as the market value less the purchase price net of the tax benefit. Over the last 10 years I have achieved an average annual “yield” of 9% tax-free and a cumulative “capital gain” of 30%. Before anyone tells me, I accept that these figures are methodologically meaningless, but they serve to comfort me that my money has not been entirely wasted. It is notable that in my case the capital gain is entirely down to AIM VCTs (Octopus and Unicorn), which fortuitously make up a large part of my portfolio. Without exception all other VCTs are showing a capital loss, some amazingly so (take a bow Quester 3, now King’s Yard).


Would you mind posting your rudimentary list here please? I am curious why AIM VCTs are seeing capital gain? Thanks

naflod
Lemon Pip
Posts: 96
Joined: November 5th, 2016, 7:40 pm
Has thanked: 52 times
Been thanked: 48 times

Re: VCT dividend returns in my portfolio....am I in the ballpark correct?

#473189

Postby naflod » January 14th, 2022, 8:54 pm

Hi njdl
I also have struggled with this matter. The only methodologically sound approach is to calculate an IRR for each share, but that is too much like hard work.

It may be because I am a Chartered Accountant (who has found out this past year that I am autistic), but maintaining a spreadsheet (the greatest gift that NASA's moon landing project gave the world :D ) tracking each VCT and the overall performance is no hardship at all.

My spreadsheet has, over the last sixteen years, grown to be a 3meg, 45 tab monster, but tells me everything that I want to know concerning the 37 different VCTs that my wife and I hold.

Over that time my return is 13.19% per year. I recognise the tax effect, including the timing effect on payments on account for Self Assessment.

Ignoring one outlier, Core IV, bought second hand, but alas on a far smaller scale than I would have liked, which generated a return of 110.8%, returns of individual VCTs range from a best 24.7% from Maven 5 VCT (initially bought second hand at a large discount then boosted by an Enhanced Buy Back) to my one loss Edge I VCT, having originally bought second hand Edge D VCT, which converted to I shares, thinking that the discount to NAV was so great that even Edge couldn't managed to blow that, but they could and resulted in -22.6% per year to its ultimate demise in December last last.

The XIRR for each share is combined in to one master tab 2,330 lines long and growing regularly.

Other sheets incclude a table of income by VCT and by month, summary of value using the mid-price as I have no intention of selling, a comparison of value to net investment cost, including a calculation of how many years the current level of dividends will take to achieve a zero net cost of each holding, fee rebates (which also feed in to the XIRR calculation) and a summary of the VCT accounts to work out the war chests that each hold for my periodic updates on here.

If you have had the endurance to read to the end of this then you undoubtedly can summon the energy to spreadsheet your investments, tax relief and dividends to track your returns.

naflod

PS If any masochist wants to dm me, I will email a copy of one sheet as an example, although there may be a delay as January is the one month of the year when my cut down work level runs to every day of the week rather just the odd day

BusyBumbleBee
Lemon Slice
Posts: 755
Joined: November 4th, 2016, 7:55 am
Has thanked: 507 times
Been thanked: 284 times

Re: VCT dividend returns in my portfolio....am I in the ballpark correct?

#473266

Postby BusyBumbleBee » January 15th, 2022, 11:45 am

Naflod included this in his really helpful contribution (gave it a rec :D )
naflod wrote:It may be because I am a Chartered Accountant (who has found out this past year that I am autistic), but maintaining a spreadsheet (the greatest gift that NASA's moon landing project gave the world :D ) tracking each VCT and the overall performance is no hardship at all.

I am a great believer in the usefulness of spread sheets having become an addict in the early 70's with Apples Visicalc.
Am also a great believer in the quality output of Professor TIm Harford (of More or Less fame) and for his "50 Things That Made the Modern Economy" which includes this episode https://www.bbc.co.uk/sounds/play/w3csz2w9 which gives a much more plausible account of the origin of the mighty spreadsheet.


Return to “Venture Capital Trusts (VCT's)”

Who is online

Users browsing this forum: Boots and 4 guests