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22:
1180:
209:, investors' money is distributed among a number of businesses. However, because the companies invested in by LSVCCs may be new and are likely small, many don't have much of a track record and can be risky investments by themselves. Ideally, an LSVCC can reduce that risk by diversifying their portfolio of assets.
292:
LSVCC funds have holding periods because of the time it takes for these small companies to meet the criteria necessary for one of the above-mentioned options. Even though the holding period is an extended period of time, the LSVCC fund company doesn't wish to retain any investment indefinitely. The
170:
This new type of fund slowly began to spread across the rest of Canada during the 1980s. But it wasn't until the late 1990s that LSVCCs became truly noteworthy outside Quebec, thanks in equal part to generous tax breaks from federal and provincial governments and attractive returns to investors. So
323:
Like tradition LP-based venture capital funds, LSVCCs don't generally invest in publicly traded firms. With a stock that's publicly traded, the price that is quoted when the market closes is influenced by the opinions of investors, analysts and other market participants who have studied the company
212:
These small to mid-sized companies are interested in receiving financing from LSVCC fund companies because they are in a high growth cycle and are looking to further support the expansion of their business. These companies are often too small or too young to secure conventional bank financing. The
330:
LSVCC fund companies are able to diversify their portfolio by investing in a relatively large number of firms thus decreasing overall risk. But this only holds to a certain degree. The companies have little track record and most are not publicly traded. Some will fail; others will stagnate. It’s
316:
Because of the nature of the holding period (often eight years), LSVCC shares usually can't be redeemed without paying penalty charges until the holding period is complete. Because of this decreased liquidity as compared with other investment instruments, LSVCCs are best for investors with longer
225:
restored the federal LSVCC credit to 15% for purchases of provincially (not federally) registered LSVCCs for the 2016 and later taxation years. Prior to 2015, the federal government had offered investors in LSVCCs a 15% tax credit on a maximum investment amount of $ 5,000 per year – worth up to $
229:
According to the
Department of Finance, the federal LSVCC program has not had the same positive impact as the provincial programs, so the federal LSVCC credit for federally registered LSVCCs will remain at 5% for 2016 and will be eliminated for 2017 and later years; see the 2016 federal budget.
340:
Government funds have come under criticism from non-Canadian sources for their relatively poor performance, as some of these funds lagged equity indices in the U.S. and Canada. Additionally, some government funds have been alleged to compete with private investment, potentially affecting the
288:
stake. They will also negotiate to have members of their portfolio management team hold positions on the board of directors of companies they invest in. This allows them to have some say in future decisions that that company makes in regards to company strategy and execution.
202:. LSVCCs offer an asset class that is normally not accessible through conventional investment vehicles. These companies have potential for substantial growth and high returns down the line if they succeed and are generally chosen precisely for that growth potential.
190:
LSVCC funds invest primarily in small and medium-sized private companies who require funding to sustain and increase growth. The emergence of the LSVCC industry stems from the idea that the growth of these firms will stimulate the
Canadian economy and create jobs.
175:. Returns for LSVCCs have generally been stagnant. Speculation about the reasons for low returns point to risky ventures, inexperienced fund managers, lack of requirement to generate positive returns to be competitive, and government intervention.
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To retain the tax credit an investor has to hold on to the shares for a set time period, often eight years. If shares are sold before this time, the amount received in tax credits may need to be repaid to the government in what's termed
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136:(RVC), is a fund managed by investment professionals that invests in small to mid-sized Canadian companies. The Canadian federal government and some provincial governments offer
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The
Ontario government has phased out the labour-sponsored funds tax credit. As of January 1, 2012, the credit is no longer available from the Ontario government.
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at a provincial economic summit conference in 1982 to help the province create a locally controlled healthy and sustainable economy. The intention was to attract
156:
1202:
86:
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58:
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in 1982. The province was in the midst of a recession and the lack of capital in small and mid-sized companies had caused numerous bankruptcies.
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primary objective of LSVCC fund managers is to obtain a superior rate of return through an eventual and timely disposition of each investment.
72:
469:
1232:
221:
To encourage
Canadian retail investors to invest in LSVCCs, the federal government and some provincial governments offer tax credits. The
237:
investors who purchased certain research-oriented LSVCC – a kind of specialty LSVCC dealing mostly in research-oriented small companies.
54:
792:
233:
Some provinces offer a tax credit, often 15%, in addition to the federal credits. An additional 5% tax credit was formerly available to
669:
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issuing the stock. Whereas LSVCC funds invest in private companies whose worth tends to be more difficult to assess and to determine.
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105:
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43:
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182:. This sponsor is able to appoint members to the fund's board of directors (but not the investee's board of directors).
1149:
912:
720:
222:
247:, they obtain the LSVCC tax credits as well as the usual tax deduction they receive each time they contribute to their
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1084:
923:
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350:
160:
32:
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871:
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726:
1222:
1079:
993:
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406:
264:
629:
623:
605:
226:
750. That credit was reduced to 10% for 2015, 5% for 2016, and was to be eliminated for 2017 and later years.
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LSVCC fund companies are also able to provide sought-after strategic guidance and operational support.
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198:. These firms are just starting out and generally aren't listed on a stock exchange such as the
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Selling the investment in a company to a larger company (often in the same industry) by way of
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704:
492:
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178:
Labour-sponsored venture capital corporations, as the name suggests, must be "sponsored" by a
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988:
856:
285:
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1043:
1038:
1018:
816:
195:
172:
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far in the 2000s, returns have been less impressive, due in part to the bursting of the
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1008:
998:
331:
the few that thrive that ideally provide the profit that makes up for the other losses.
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time horizons who are able to hold their shares for the full holding period.
525:
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LSVCC fund companies tend to use their investment in a company to buy an
777:
520:
234:
486:
148:
The idea behind LSVCCs was first proposed in the
Canadian province of
149:
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248:
244:
781:
529:
516:
The
Morningstar Guide to Labour-Sponsored Venture Capital Funds
355:
259:
Gains made in the value of LSVCCs occur in one of three ways:
15:
140:
to LSVCC investors to promote the growth of such companies.
341:
development of new companies in areas where they operate.
194:
The money investors put into these firms is a form of
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967:
815:
736:
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46:. Unsourced material may be challenged and removed.
675:Scientific Research and Experimental Development
907:Qualifying investor alternative investment fund
270:Exiting from an investment in a company via an
55:"Labour-sponsored venture capital corporation"
793:
541:
8:
867:Labour-sponsored venture capital corporation
120:labour-sponsored venture capital corporation
464:. Princeton University Press. p. 248.
280:in currently held investments in a company.
1179:
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106:Learn how and when to remove this message
243:When an investor buys an LSVCC in their
372:
429:: CS1 maint: archived copy as title (
422:
7:
488:Tax Policy and the Economy, Volume 3
380:Taylor, Peter Shawn (Jan 16, 2007).
44:adding citations to reliable sources
1203:Tax credits and benefits in Canada
382:"Everyone's guide to tax shelters"
14:
648:Labour-sponsored funds tax credit
345:Major LSVCC venture capital firms
1178:
1171:
1170:
127:labour-sponsored investment fund
20:
657:Major deductions and incentives
31:needs additional citations for
1004:Socially responsible investing
934:Split capital investment trust
583:Major tax credits and benefits
1:
892:Open-ended investment company
716:Children’s fitness tax credit
491:. MIT Press. pp. 47–68.
1150:Returns-based style analysis
913:Real estate investment trust
721:Universal child care benefit
223:2016 Canadian federal budget
1233:Investment Trusts of Canada
1085:Efficient-market hypothesis
157:Quebec Federation of Labour
1249:
924:Short-term investment fund
762:Workers Income Tax Benefit
485:Poterba, James M. (1989).
461:Boulevard of Broken Dreams
1168:
872:Listed investment company
841:Fonds commun de placement
750:Public Transit Tax Credit
727:Working Income Supplement
711:Children’s art tax credit
167:to smaller Quebec firms.
1080:Arbitrage pricing theory
699:Canada Child Tax Benefit
630:Climate action incentive
624:Child Disability Benefit
606:Canada Employment Credit
265:mergers and acquisitions
1155:Traditional investments
1140:Commodity pool operator
1114:Noisy market hypothesis
1109:Modern portfolio theory
959:Unitised insurance fund
887:Open-ended fund company
829:Common contractual fund
351:Fonds de solidarité FTQ
272:initial public offering
205:In an LSVCC, as in any
125:, known alternately as
1228:Canadian corporate law
1135:Alternative investment
1049:Institutional investor
664:Capital Cost Allowance
612:Canada workers benefit
574:Corporate income taxes
569:Income taxes in Canada
556:Income taxes in Canada
521:List of LSIF Companies
297:Common characteristics
200:Toronto Stock Exchange
134:retail venture capital
949:Unit investment trust
809:Investment management
642:Investment Tax Credit
636:Disability Tax Credit
595:Basic personal amount
458:Lerner, Josh (2009).
186:Companies invested in
939:Tax transparent fund
835:Exchange-traded fund
744:Education Tax Credit
618:Caregiver tax credit
600:Canada Child Benefit
278:Capital appreciation
40:improve this article
994:Manager of managers
902:Private-equity fund
756:Textbook Tax Credit
361:GrowthWorks Capital
308:tax credit clawback
1218:Taxation in Canada
1104:Martingale pricing
1014:Thematic investing
979:passive management
1190:
1189:
968:Investment styles
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774:
771:
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705:Child Tax Benefit
471:978-0-691-14219-7
173:technology bubble
155:In response, the
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1208:Investment funds
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989:Impact investing
857:Investment trust
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405:. Archived from
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1064:Performance fee
1054:Net asset value
1044:Fund governance
1039:Closed-end fund
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400:"Archived copy"
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255:Realizing gains
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196:venture capital
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165:venture capital
161:Solidarity Fund
146:
112:
101:
95:
92:
49:
47:
37:
25:
12:
11:
5:
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1213:Private equity
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1128:Related topics
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1009:Social trading
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999:Social finance
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670:RRSP deduction
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510:External links
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1059:Open-end fund
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944:Umbrella fund
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919:Royalty trust
917:
914:
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882:Offshore fund
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847:Fund of funds
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498:0-262-06126-0
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445:"Budget 2016"
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412:on 2016-08-17
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57: –
56:
52:
51:Find sources:
45:
41:
35:
34:
29:This article
27:
23:
18:
17:
1145:Robo-advisor
1090:Fixed income
1021: /
977: /
897:Pension fund
866:
647:
487:
480:
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439:
414:. Retrieved
407:the original
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180:labour union
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102:
96:October 2011
93:
83:
76:
69:
62:
50:
38:Please help
33:verification
30:
1119:Yield curve
1032:Terminology
984:Hedge Funds
877:Mutual fund
817:Investment
677:(SR&ED)
217:Tax credits
207:mutual fund
159:proposed a
138:tax credits
1197:Categories
954:Unit trust
862:Hedge fund
852:Index fund
821:structures
685:Eliminated
590:Age amount
416:2016-08-08
386:MoneySense
367:References
356:Fondaction
132:or simply
66:newspapers
1098:Convexity
692:Childcare
336:Criticism
320:Valuation
313:Liquidity
1176:Category
1094:Duration
425:cite web
909:(QIAIF)
562:General
235:Ontario
144:History
123:(LSVCC)
80:scholar
1073:Theory
975:Active
915:(REIT)
764:(WITB)
752:(PTTC)
737:Others
723:(UCCB)
701:(CCTB)
495:
468:
286:equity
150:Quebec
130:(LSIF)
82:
75:
68:
61:
53:
1160:UCITS
1019:Value
929:SICAV
843:(FCP)
837:(ETF)
831:(CCF)
758:(TTC)
746:(ETC)
729:(WIS)
707:(CTB)
666:(CCA)
644:(ITC)
638:(DTC)
632:(CAI)
626:(CDB)
620:(CTC)
614:(CWB)
608:(CEC)
602:(CCB)
410:(PDF)
403:(PDF)
87:JSTOR
73:books
1184:List
819:fund
493:ISBN
466:ISBN
431:link
327:Risk
249:RRSP
245:RRSP
59:news
42:by
1199::
1096:,
427:}}
423:{{
384:.
251:.
118:A
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103:(
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94:(
84:·
77:·
70:·
63:·
36:.
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