The Seneca EIS Portfolio Fund invests in a mixture of unquoted and AIM-listed companies that are scaling up. It has a target return of 2x capital (before fees) and typically provides 5-7 investments in each portfolio. The fund has been running for over a decade and the management team has been in place for some time. Seneca has achieved a good number of exits over the past decade, taking advantage of liquidity on AIM when appropriate.

Why invest

Positives

• Strategy: Exposure to a portfolio of growth companies, split roughly equally between unquoted and AIM-listed investments.

Issues

• Diversification: Lower than many established EIS funds.

The investment manager

Positives

• Team: Has a wide range of experience, with particular strengths in accounting and corporate finance.

Issues

• Size: Seneca runs a lean team – while it seems adequate for its current level of activity, it is smaller than others of similar scale.

Nuts & bolts

• Duration: The service is evergreen, with no formal closings, and investors simply participate in the deal flow after investment.
• Diversification: The manager aims to provide between five and seven investments, although an investor can request more or less than this number.
• Valuation: Updated quarterly following IPEV guidelines, and reviewed.

Fees

• Fees: A combination of direct fees and company charges. The latter are not charged to AIM investments, while the annual fee is contingent, aligning fees with investors.
• Performance fee: Charged at 20% on aggregate returns over 100% of subscription plus fees.

Risks

• Target returns: The target of 2x invested capital, before fees, suggests a medium-to-high-risk investment strategy.
• Companies: Supplying risk capital to companies that have revenue and are scaling up. There will be a spread of company returns, as the successful ones will do very well, but those that fail may do so completely.