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EIS AND THE HUNT FOR RETURNS Diversification is key to steady returns, but how you diversify is just as important, says James Sore, Chief Investment Officer at SyndicateRoom Interest rates are at a historic low, UK gilts yields continue to fall, and property – both commercial and residential – is under pressure. In this unstable environment, more and more investors are beginning to look elsewhere to grow their finances. To find it, they’re going to have to move up the risk curve for a chance at higher returns meaning the percentage of portfolios that include EIS and VCT investments and the weighting those investments hold within these portfolios will only increase. EIS investments are often uncorrelated to main market movements, at least on a day-to-day basis. They also come with significant risk-reducing tax reliefs and high potential returns, and as such offer an attractive investment opportunity for investors. Fintech companies have been breaking down barriers to entry and increasing the sophistication of access to retail investors, and financial advisers are also becoming more comfortable with the inclusion of EIS deals in portfolios. But what’s the best way to navigate this investment landscape and what should you think about when selecting an investment strategy? The finance free lunch The Nobel Prize-winning economist Harry Markowitz famously once said: ‘Diversification is the only free lunch in finance’ It’s a wonderfully satisfying soundbite, but what exactly does he mean and how should we interpret this statement in order to inform investment decisions and maximise returns? Building a broad portfolio of investments of different stages, liquidity, sectors, sizes and types reduces the chances of having highly correlated investments within the portfolio, where macro changes such as housing market changes, unemployment or general market performance can affect all investments in the same way. Having an array of different types of investments also allows for a balance of risk and returns which should be in line with your overall investment risk profile. The higher-risk end of your portfolio should include some earlier-stage equity investment exposure, especially if you are not approaching retirement. Simply diversifying by buying a smaller stake in a number of deals can potentially reduce your risk exposure compared to 24 EIS Yearbook 2016/17
Thought Leadership The more you know about the business, the closer you can get to accurately assessing its intrinsic value and not its stock price, which is often a very poor mechanism for valuing a business SOURCE PRICE NEGOTIATE INVEST Yearbook 2016/17 · www.eismagazine.com 25
Page 1 and 2: FOR PROFESSIONAL INVESTMENT ADVISER
Page 3 and 4: CONTENTS CHAPTER • 1 Foreword Mar
Page 5 and 6: The Blackfinch Asset Focused EIS Po
Page 7 and 8: LOOKING BEYOND BREXIT Welcome to EI
Page 9 and 10: THOUGHT LEADERSHIP
Page 11 and 12: Thought Leadership The summer of 20
Page 13 and 14: Thought Leadership Let’s not be s
Page 15 and 16: Thought Leadership In fact, much of
Page 17 and 18: Thought Leadership RISK EQUALS REWA
Page 19 and 20: Thought Leadership budget and appet
Page 21 and 22: Thought Leadership to see taxes for
Page 23: Full service creative agency As spe
Page 27 and 28: Thought Leadership investing larger
Page 29 and 30: Thought Leadership Start-ups are us
Page 31 and 32: Thought Leadership Considerations f
Page 33 and 34: Thought Leadership crowdfunding pla
Page 35 and 36: Thought Leadership A valuable addit
Page 37 and 38: INVESTMENT SPOTLIGHT
Page 39 and 40: Investment Spotlight A BIRD’S EYE
Page 41: Investment Spotlight ACTION! UK FIL
Page 44 and 45: Make It Your Business Toil. Hard gr
Page 46 and 47: Helping you support your clients’
Page 49 and 50: Investment Spotlight INVESTING IN T
Page 51 and 52: Investment Spotlight THE INSIDE TRA
Page 53 and 54: Investment Spotlight DISRUPTING THE
Page 55 and 56: Investment Spotlight DIVERSIFICATIO
Page 57 and 58: Investment Spotlight GROWING THROUG
Page 59 and 60: ENHANCED PROFILES
Page 61 and 62: Enhanced Profiles USPs • Reputati
Page 63 and 64: Enhanced Profiles USPs • Over 20
Page 65 and 66: Enhanced Profiles USPs • Two spec
Page 67 and 68: Enhanced Profiles INVESTMENT STRATE
Page 69 and 70: Enhanced Profiles USPs • A ‘com
Page 71 and 72: Enhanced Profiles USPs • Sector e
Page 73 and 74: Enhanced Profiles USPs • Hands-on
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Directory ACCELERIS CAPITAL Norman
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Directory DAEDALUS PARTNERS LLP Gav
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Directory JOULE ASSETS EUROPE Jessi
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Directory SENECA Jack Rose, LGBR Ca
Page 83 and 84:
INFORMATION MEMORANDUM For further
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Open Offers EIS Open December 2015
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Open Offers Open 05/09/2016 Minimum
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Open Offers EIS Open 06/09/2016 Clo
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Open Offers SEIS Open 17/01/2014 Cl
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Open Offers IHT Open October 2014 C
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IFAMAGAZINE.COM EISMAGAZINE.COM FAN
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