Peter Hicks, of financial advice firm Chelsea Financial Services, said: “The formerly £1bn megalith Octopus Titan has become a tragic memorial to VCT investors and managers alike of the risks of becoming too big, too unwieldy and too expensive.
“In the year ended 2021, Octopus Titan VCT charged a performance fee of £64m – much of it on unrealised net asset value (Nav) uplifts from the previous year. This was during the post-pandemic recovery, when the wider market was stimulated upward by unprecedented quantitative easing.
“Since then, performance has tanked, with the Nav declining significantly. This means investors have lost out twice: both on the expensive performance fees, which never materialised into actual gains for shareholders, and on vertiginous Nav write-downs.”
In the VCT’s latest accounts, Octopus confirmed it would pay back up to 20pc of the trust’s annual management fee if it failed to meet its targets. It has agreed to be bound by the commitment to refund fees until specific performance and asset realisation targets are met.
So far Octopus has paid back almost £1m for the period from Sept 11 to Dec 31, 2025, the full 20pc possible. Octopus said the money had been returned to the VCT itself rather than being directly paid to investors.
Tom Leader, chairman of Octopus Titan VCT, said: “Performance over the past four years has been materially below expectations.
“Realisation levels remain insufficient to support sustainable distributions to shareholders, either by way of dividends or share buybacks, and valuations across most venture-backed businesses continue to reflect cautious investor sentiment.”
The decision to refund the charges followed a strategic review published last year in which the VCT’s board of directors criticised Titan for poor performance and high fees. It particularly condemned the performance fee, which it said “clearly delivered sub-optimal outcomes for shareholders”.
The board concluded there had been “a growing mismatch” between the rate of return and hold period of Titan’s underlying investments and that its fees were “at the higher end of Titan’s VCT peer group”.
To encourage savers to invest in VCTs, the Government offers 20pc tax relief on up to £200,000, provided the saver holds the shares for up to five years. The Chancellor reduced this relief from 30pc to 20pc in the most recent Budget.
A spokesman for Octopus Investments said: “We recognise shareholders’ continued frustration with Titan VCT’s performance in recent years. The decline in Nav over the past 12 months has been driven by a small number of write-offs, the broader market for venture-backed growth businesses remaining subdued, and more conservative valuations as some businesses shift from growth to profitability in response to these conditions.
“This has outweighed the progress we are seeing elsewhere across the wider portfolio.”
