In the next instalment in our series of exclusive interviews with industry experts, Mark Bower-Easton, Head of Distribution at Oxford Capital, provides his insight on the biggest growth opportunities and most common risks for investors, as well as discussing his company’s approach to investing.
1.) What tax-efficient schemes does your company work with, and how do you offer a unique/compelling approach for advisers?
Oxford Capital has been managing EIS investments for 25 years and pioneered EIS fund structures. Our flagship investment programme is the Oxford Capital Growth EIS. Complementing our Growth EIS, we also offer our Co-Investor Circle, which allows investors to invest in to single-company deals.
2.) How active are you in providing education to advisers on the types of clients that are suitable for these types of investments, as well as any changes in regulation or nuances in the existing rules?’
Oxford Capital hosts regular webinars on key topics that are relevant to advisers and their clients, including investment strategy, fee structures & product features, case studies, half-yearly reports, EIS investment administration. We also make available a series of video interviews with the founders we have backed. We also run a weekly EIS Clinic, where advisers can book in a slot and discuss absolutely anything EIS-related.
3.) Where and in which types of companies are you seeing the biggest growth opportunities?
Our focus is on areas in which the UK has an advantage in global markets. These include digital health, which leverages the unique role of the NHS, and Fintech, which benefits from the largest sector in the UK and a helpful regulatory regime that fosters innovation. There’s also E-commerce, for which the UK has the highest penetration of e-commerce in Europe, and has a track record of developing new models.
We are also focused on artificial intelligence (AI), as the UK is home to some of the best universities and research organisations working on AI. It also benefits from a large talent pool with experience in this sector. Lastly, there’s climate technology, which was the highest growth sector for investment in 2023 and is set for expansion in 2024 with investment in EV and battery technologies.
4.) What do you see as the biggest risks for investors?
Beyond the usual investment risks such as illiquidity and risk of loss, investors should consider the track record of investment managers and the administration of EIS investments. The FCAs Consumer Duty rules have also placed a focus on the lifetime cost of an investment.
This, along with our own market research, is something we took in to account when we refreshed out fee structure for 2024, which now provides investors with clarity on what their maximum lifetime cost will be, at the point they make their investment.
5.) Should advisers be worried about a lack of diversification, and why?
Diversification is very important, as it helps to reduce the overall risk profile of an investor’s portfolio. Some EIS providers target deployment across a small number (4-5) of portfolio companies, and this increases concentration risk significantly. At Oxford Capital we target deployment across 9-12 companies.
Advisers and their clients should consider diversification across a number of EIS investment providers, but also take into consideration factors such as the growth stage of the portfolio companies, expected duration and sector diversification.
