EIIS - share notes

rejoyce

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Hi

EIIS have been discussed here before but some of the threads are pretty old and the recent one is more about Budget 2022 changes, so starting a new one.

Its that time of year again EIIS time, interested to hear from people who have done it.

that I can find there are the following offering them :
  • EIIS Management (Goodbody & Baker Tilly)
  • BES Management (Davy & BDO)
  • BVP
  • Tontine
  • Green Crowd
Does anyone know others?

I've done the first 3 in the list above but would be particularly interested in how investments in 2016 and before have fared. I've been in touch with some of them but they won't go into any specifics about funds other that the ones I am invested in. I don't think it is confidential information and I would just consider it due diligence finding out how prior years fared.

thanks
 
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Jim2007

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2,261
Looking at the scheme as a whole it seems with fees and capped returns that none of them would compare well with (say) investing in an ETF tracking a major index but thats not to say that those ETFs will continue as well.
You are comparing chalk and cheese. An EIIS scheme whole have a completely different risk profile to a type ETF, which means you'd need to get a significantly higher return to compensate for the additional risk.
 

rejoyce

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25
Sure that's why I said "thats not to say that those ETFs will continue as well."

Point is as an equity investment, EIIS are considered high risk, its just the risk is softened by the tax relief
 

Steven Barrett

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4,153
Sure that's why I said "thats not to say that those ETFs will continue as well."

Point is as an equity investment, EIIS are considered high risk, its just the risk is softened by the tax relief
They are very high risk. Irish SMEs. To put that into context, Bank of Ireland is deemed a small company if investing in a Global index at a market cap of $5.54 billion. These companies are valued in the millions. And some of the EIIS are for just one of them! :eek:. If you are to do them, certainly continue in investing in funds.

And Jim is right, there is no comparison between global ETFs and EIIS. With a global ETF, the biggest holding is Apple at 4% with a market cap of $2.65 trillion!
 

Jim2007

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Sure that's why I said "thats not to say that those ETFs will continue as well."

Point is as an equity investment, EIIS are considered high risk, its just the risk is softened by the tax relief

No it is not remotely close. For a start a well diversified ETF is consider a much lower risk the property and your EIIS is easily higher than property or base materials. My advice is to press the pause button and learn about financial risk, before you loose serious money.
 

rejoyce

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25
No it is not remotely close. For a start a well diversified ETF is consider a much lower risk the property and your EIIS is easily higher than property or base materials. My advice is to press the pause button and learn about financial risk, before you loose serious money.
OP has been changed, it is just about past performance of EIIS schemes and not asking about risk profiles of various investment options.

My advice to you Jim is to learn the difference between lose and loose, it could save your life one day.
 

Zenith63

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893
My experience as a recipient of EIIS funding both directly and through funds, is that the investment funds drastically reduce the level of risk (compared to investing in individual EIIS companies), not just because your money is spread across a few different companies, but because of the due diligence and restrictions they put on companies that receive money. In my cases, the sole focus as they go through the process with an EIIS recipient is to ensure the company will have the ability to repay the investment at the end of 4-5 years along with their (fairly hefty) fees. They’re not especially interested in the growth of the company, other than how it pertains to getting the invested money back - they’re not trying to get you a 2x return or anything like that.

Their aim is to get you your tax back, get you your money back and collect their fees, nothing else. And they seem to be quite effective at this. I’d guess if they were willing to disclose the returns on the funds, this is what you’d see.
 

rejoyce

Registered User
Messages
25
My experience as a recipient of EIIS funding both directly and through funds, is that the investment funds drastically reduce the level of risk (compared to investing in individual EIIS companies), not just because your money is spread across a few different companies, but because of the due diligence and restrictions they put on companies that receive money. In my cases, the sole focus as they go through the process with an EIIS recipient is to ensure the company will have the ability to repay the investment at the end of 4-5 years along with their (fairly hefty) fees. They’re not especially interested in the growth of the company, other than how it pertains to getting the invested money back - they’re not trying to get you a 2x return or anything like that.

Their aim is to get you your tax back, get you your money back and collect their fees, nothing else. And they seem to be quite effective at this. I’d guess if they were willing to disclose the returns on the funds, this is what you’d see.
this is my impression too, also the return are usuall capped around 15-20% Its perfect for whiskey maturation, they need working capital, they could have the end product sold at maturation but need to fund the 5 years sitting in barrells
 

Jim2007

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2,261
this is my impression too, also the return are usuall capped around 15-20% Its perfect for whiskey maturation, they need working capital, they could have the end product sold at maturation but need to fund the 5 years sitting in barrells
It's not about your impression or experience, it about statistics and probability. I spent 30+ years doing performance and attribution analysis - in other words trying to explain to people how their investments ended up where the did. But at the end of the day it's your money.
 

Gordon Gekko

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I’d run a mile from all of these.

The funds are marketed as being diversified, but the reality is quite different. They end up scrambling around to invest in any old rubbish at year-end just to avoid having to give investors back their money.

In a low interest rate environment, it’s expensive enough funding (if quasi debt rather than pure equity). So invariably they’re companies everyone else has said no to. And the pure equity plays tend to be hail marys.

People get blinded by the tax relief, but €100k, net €60k invested in ‘Jeffrey & Ghislaine’s Modelling Agency’ is still a €60k loss.
 

Brian McD

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14
Stick to hard asset backed EIIS in sectors such as wind farms, nursing homes & solar energy and you should fare out OK
 
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