Automatic early-stage diversification

Fund Twenty8 is the first and only fund to invest passively in EIS opportunities and provide a totally new choice for investors. The fund’s strategy is to use its algorithm to automatically build you a diversified portfolio of at least 28 EIS-eligible early-stage investments, across a broad range of sectors, targeting a return of over 20% IRR including EIS tax relief.

By only backing companies that successfully reach their funding target on SyndicateRoom, Fund Twenty8 takes advantage of the expertise of its investor base of Venture Capitalists, business angels and sophisticated investors.

After strong interest, Fund Twenty8 – 2016 raised over £4.5m from 233 investors.

What is passive investing?

Active investing allows you to handpick your investments, using your expertise and experience to determine for yourself which deals are right for your portfolio and how much to invest. It’s what private investors on SyndicateRoom do every day through our available investments page and to date have invested in over 110 UK businesses.

With passive investing, the decision of which opportunities make up your portfolio is made for you by the fund manager – or determined automatically using our unique algorithm, as in the case of Fund Twenty8. This allows you to gain exposure to a greater number of sectors and opportunities than if you invest only in the sectors with which you are familiar.

After repeated requests to provide a fund, we reviewed the market and discovered there were only single-sector funds and they offered only small portfolios to an investor – around five to eight investments per fund.

We wanted to offer investors a different option. With the rise of passive investing, and the fact that passive funds consistently outperform the majority of actively managed funds in the main market, we were surprised to find there were no passive EIS funds already available. So we built one ourselves.

James Sore

Chief Investment Officer, SyndicateRoom

Cross-sector diversification

Investors know that to mitigate risk, one must diversify. It’s the old ‘all eggs in one basket’ maxim. By building a portfolio of uncorrelated investments, across multiple sectors, you reduce your chances of a single sector experiencing a negative change and it bringing down your entire portfolio; think, for example, of how the shift in oil price dramatically affected a vast number of investments within that sector.

SyndicateRoom works with companies from all sectors, choosing opportunities to list based on their quality, not their industry, and allowing its broad investor base of sophisticated investors to decide whether or not to invest in these opportunities directly.

To give you an idea of the breadth, here’s what the sector breakdown of SyndicateRoom’s portfolio looked like in November 2017.

SyndicateRoom portfolio for active and passive investing