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SyndicateRoom reveals EIS trends for 2017 and identifies knowledge gap among retail investors

Only one in ten retail investors have invested in tax-efficient products aimed at early-stage investing in the past 12 months, including Venture Capital Trusts (VCTs), the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS).

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The research commissioned by SyndicateRoom also highlights a knowledge gap between different investor types. This knowledge gap suggests that further education on the benefits of these products may encourage these type of investments.

  • Only a fifth of retail investors claims to be knowledgeable of VCT and EIS products.

  • The level of knowledge of these products is much higher for those aged 18–30, as well as for those with more than £1m in investments.

  • Half of retail investors state that tax-efficient investment products make them more likely to invest.

  • A third say these products don’t impact their investment decisions.

Gonçalo de Vasconcelos adds: “The disparity of interest in tax-efficient investment schemes and early-stage investing among the different age groups and types of investor could simply be down to awareness and knowledge of products such as EIS. Our research shows there is a clear educational gap among those in the older age brackets, as well as those with investment pots below £1m. This means that many retail investors are missing out on the benefits of early stage tax-efficient investment products that well-informed millennials and those with larger investment pots are taking advantage of.”

Commenting on the advantages EIS offers for early stage investing, Rt Hon Mark Field – MP for Cities of London and Westminster, Former Chairman of the All-Party Parliamentary Group on Venture Capital and Private Equity said: “As the former owner of a successful business, I fully appreciate and understand the need for investment to grow a profitable enterprise.  The Enterprise Investment Scheme (EIS) is designed to offer a stimulus for Britain’s ambitious small and medium businesses and provides a burgeoning asset class for British investors.”

“EIS also plays a role in bringing forward the kinds of technological innovations that will be so important to maintaining Britain’s competitive advantage in business and finance on the world stage.”

“One of the most attractive attributes of EIS investing is its fundamentally democratic nature. EIS gives power and control to individuals to invest directly in fast-growing British companies, and the chance to share in their success. The scheme has the support of government and SyndicateRoom’s report puts together a strong case for EIS investing.”

“With the advent of similar platforms and increasing appetite for risk, EIS investing is becoming more and more popular. I hope the broader finance community continues to work together to nurture this exciting opportunity.”

The research found that investors that are more knowledgeable of tax efficient products are more likely to believe that a portfolio of diversified early-stage equities will help them achieve their long-term financial goals. Approximately half of investors with over £1m in investments see EIS and SEIS as positive and impactful vehicles to reaching their goals.

Over half of investors in this category feel they are ‘completely on track’ in achieving their financial goals, compared to only 39 per cent of investors with under £100,000.

A fifth of those with under £100,000 would ‘definitely’ take on riskier investments to get themselves back on track, compared to just 11 per cent of those with over £1m.

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