39: Moving the EIS and VCT industry from tax efficiency to venture capital with benefits | Brian Moretta of Hardman & Co

30 Nov 2021 / Podcast Tax Advantaged

In this episode the tables are turned as the usual host, Brian Moretta, has recently published a paper on how venture capital fits into retail investor portfolios, with some surprising results. Andrew Aldridge steps into the host seat to discuss the paper.

The heart of the paper is about the consequences of venture capital being a diversifying asset compared with equity and bonds. Brian discusses what this means for investors and how investors can increase expected returns on their portfolios without taking any additional risk by adding venture capital in the right way. There are consequences for the overall asset allocation which are easily dealt with, but are important.

They also talk about several other areas covered in the paper. The analysis initially shows the benefits are significant without tax reliefs, but also looks at what happens when these are added. The genuine exceptions are discussed, as well as common misconceptions; these include the pension fallacy, the idea that pensions should be filled first, and the idea that high risk investments are only for high-risk investors – both are demonstrably false.

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Hardman & Co website

Link to the White Paper

Thanks to our White Paper sponsors: SyndicateRoom, One Four Nine Wealth, Nova Growth Capital and Deepbridge Capital. Thanks, also, to Andrew Aldridge, Head of Marketing at Deepbridge, for interviewing so ably.

Suggested reading

The Choice by Edith Eger

Trust Me I’m Lying by Ryan Holiday

Brian Moretta is Head of Tax Enhanced Services at Hardman & Co. He is an actuary-turned-fund manager, who then moved into equity research, and has analysed many EIS funds, VCTs and companies, both listed and unquoted. He also has academic credentials, being an Honorary Fellow at Heriot-Watt University, where he does some occasional teaching. This has included teaching MSc students about, inter alia, Modern Portfolio Theory. He has always had a strong interest in getting underneath companies and understanding how they really work, and he finds venture capital fascinating. Some of this is because transparency is hard, some because the industry is not well understood. He is doing his best to change both of these. Brian Moretta is also host of the EIS Navigator podcast, and received Highly Commended at the 2021 EISA awards for the category Best Journalist or Advocate.