| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 55.98 | 55 |
| Intrinsic value (DCF) | 15.80 | -56 |
| Graham-Dodd Method | n/a | |
| Graham Formula | n/a |
Octopus AIM VCT 2 plc is a UK-based venture capital trust (VCT) specializing in investments in small and medium-sized enterprises (SMEs) listed on the Alternative Investment Market (AIM) of the London Stock Exchange. The fund targets a diversified portfolio across sectors such as financial services, healthcare, biotechnology, industrial engineering, and retail, aiming to provide shareholders with tax-efficient returns through capital growth and dividends. As part of the Octopus Investments group, it benefits from a strong track record in venture capital and private equity. The trust focuses on high-growth potential companies in the UK, offering investors exposure to dynamic small-cap equities while leveraging VCT tax reliefs, including income tax relief and tax-free dividends. With a market cap of approximately £74.4 million, Octopus AIM VCT 2 plc plays a key role in funding innovative UK businesses while providing investors with a unique tax-advantaged investment vehicle.
Octopus AIM VCT 2 plc offers investors exposure to high-growth AIM-listed companies with the added benefit of UK VCT tax incentives, including 30% income tax relief and tax-free dividends. However, the trust reported a net loss of £399,000 in its latest fiscal year, with negative EPS and operating cash flow, indicating potential risks in portfolio performance. The fund’s focus on small-cap equities introduces higher volatility, reflected in its low beta (0.49). While the dividend yield (7.2p per share) is attractive, the negative earnings and cash flow raise sustainability concerns. Investors should weigh the tax advantages against the inherent risks of investing in early-stage and small-cap companies, which are sensitive to economic downturns and liquidity constraints.
Octopus AIM VCT 2 plc operates in a niche segment of the asset management industry, specializing in AIM-listed small-cap investments with tax-efficient structures. Its competitive advantage lies in its affiliation with Octopus Investments, a well-established UK asset manager with expertise in venture capital and private equity. The trust’s focus on tax-advantaged VCT investments differentiates it from conventional equity funds, appealing to UK investors seeking tax relief. However, its performance is highly dependent on the success of high-risk small-cap holdings, which may underperform in economic downturns. Compared to broader equity funds, Octopus AIM VCT 2 offers less diversification, concentrating solely on UK AIM stocks. The trust’s ability to source high-growth opportunities and manage portfolio risk will be critical in sustaining investor returns. Competitors include other VCTs and small-cap-focused funds, but Octopus’s established brand and tax-efficient structure provide a relative edge in the UK market.