Hutchinson joined Unicorn in January 2006, after spending eight years at Montanaro Investment Managers as a smaller companies specialist. He is now responsible for the Unicorn AIM VCT I Trust, which had £43.1 million of net assets on its books as of 31 December, spread over three sub-funds.

‘Unicorn Asset Management is one of the most experienced AIM investors in the UK, with over £100 million invested,’ says Hutchinson. ‘We have a well-established and successful track record and employ a prudent approach to managing our VCTs.’

The Unicorn AIM VCT aims to provide shareholders with attractive returns from its investments by maximising income capital gains generated by the shares in the portfolio.

‘Our consistent focus is to identify and invest in solid, profitable companies at attractive valuations. We look for established businesses with the ability to generate sufficient cash to fund their growth, whose managers pursue a progressive dividend policy.

‘AIM, in common with equity markets around the globe, has experienced extreme volatility in recent months. The AIM All-Share Index registered strong gains in the first half of 2007 but, since July, has been on a downward trend and has fallen by almost 25 per cent from its peak.’

Hutchinson believes that the sudden re-emergence of value combined with irrational anomalies in the pricing of specific stocks has resulted in some really good prospects for UK equity markets and for AIM-focused VCTs in particular.

Clerkenwell Ventures, he says, offers one example of the disconnection between risk and pricing. ‘Clerkenwell is an AIM-quoted cash shell, headed by David Page of Pizza Express fame, that, in August 2007, raised £25 million via a placing of shares to fund an acquisition strategy in the restaurant sector. To date, no acquisitions have been made, the value of the restaurant sector has plummeted, the interest earned on the cash balance exceeds the running costs of the company and yet the shares can be bought at a 30 per cent discount. In a market where it is possible to buy £1 worth of cash for only 70 pence, I know there are good returns to be had,’ enthuses Hutchinson.

The VCT industry is predicted to raise between £150 million and £250 million this tax year, somewhat less than the £250 million of last year and the £750 million in 2006. This lack of demand, it is argued, is due to the continuing changes implemented by various Budget legislations, of which the most recent was the reduction in tax relief from 40 per cent to 30 per cent.

‘Investing in AIM-based VCTs should first and foremost be about the track record and approach of the investment manager. The tax breaks available are undoubtedly attractive, but their value falls away substantially if the underlying investment portfolio is unsound and ends up eroding your capital,’ explains Hutchinson. ‘Any high-net-worth investor should aim to allocate a small portion of their hard-earned wealth to a broadly based portfolio of shares in AIM-listed companies.’

By Hutchinson’s definition, we are now officially experiencing a bear market and he strongly believes that his conservative approach to investing in AIM is the best course of action. ‘In what can be a notoriously difficult and volatile sector, I believe that a conservative approach is the best way of maximising the stream of tax-free dividend distributions to shareholders over the long term.’

Clerkenwell Ventures	AIM	£23.5m	28.50p	0.00p
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