The economic environment in 2012 may be tough but, in investment terms, it makes for fertile ground. This applies especially to the smaller end of the market. Of course, this investment potential is not always obvious to investors due to economic concerns: VAT, travel, university tuition fees, and council tax have all risen, along with inflation. However, one needs to take into account that 2012 appears to be following the typical recession and recovery pattern. By the end of the year, 2012 may simply constitute another step on a historically well worn path.
Looking back at previous lows (1990-1991, 2000-2002), a period of transition followed upheavals before the effects of recovery were felt four or five years on. Similarly, we have come through 2008-2010, and now we face 2012: a tough, yet transitional, year for the economy, but a promising one for investors. Furthermore, historical empirical evidence tells us that periods when an economy is moving from a recession to a recovery phase can underpin stronger returns.
From 2008, many businesses were fighting for survival, and yet in 2010, when they started to consider or need funding again, they were placed into limbo by uncertainty in the form of two budgets, a general election, and the spending review, all topped off by large amounts of snow. Fortunately, there is now a major impetus to kick-start the investment cycle. Those who commit to the market as we head into 2012, will be doing so at a time when opportunities to invest, and the number of investment deals, should both be increasing.
However, it’s likely that we will see this change in 2012 as many companies won’t be able to put off fund raising any longer. Renewed funding requests will result in a chain of positive activity: a stronger deal flow for VC houses, more opportunities for individual investors and, ultimately, investments made in good companies. In light of this, 2012 may well be an opportune time for investment in VCTs. Ultimately, the challenging economic outlook for 2012 makes for bright investment prospects.
To learn more, please read this Guide to VCTs
For more information on our latest VCT offerings, please download the following documents:
- Foresight VCT – Investor Guide
- Baronsmead VCT* – Investor Guide
- Albion VCT – Investor Guide
- Matrix VCT – Investor Guide
Alternatively, if you wish to speak to your Advisor about VCTs, contact us today.
*Please note that this VCT offer is now fully subscribed and is no longer available for investment.
