People often draw attention to the illiquidity of Enterprise Investment Scheme (EIS) portfolios, but the market wobbles of the past week point to some of the positives of that illiquidity.

Because most of the holdings in these portfolios are usually unlisted companies – businesses that are quietly getting on with the job of growing without fretting about the vagaries of market sentiment – their valuations tend to remain fairly stable from day to day.

Current HMRC rules require that EIS assets need to be held for at least three years to avoid loss of tax reliefs, and two years for inheritance tax relief eligibility. In reality, you are likely to be holding assets in a portfolio for longer to achieve the optimum outcome. These rules encourage managers to think long term – in terms of years. This is positive for the companies and it is positive for investors in times like this, when they can otherwise spend much of their time worrying about what will happen next week.

The most important question for us – and the growing number of financial advisers who recognise the value of EIS – is not: “What is a company worth today?” Instead it is: “What is the company doing today that will add value tomorrow?”

Markets and economies are seldom synchronised, as has been demonstrated this week as stock markets have taken a tumble at the same time as the global economy is picking up speed. Markets can matter for us – if we are looking to exit through an initial public offering, for instance (though there are other ways to exit too). But on the whole, we are more concerned about what is happening in the economy and how that affects our businesses and their long-term future. We are also more interested in global trends – the tail winds that can help drive forward particular sectors, like healthcare and technology.

So, amid all the frenzy of the past week, our portfolios have remained fairly unperturbed, offering investors who hold them an oasis of calm within their wider portfolios and allowing us to focus on the things that matter in the long term.

John Glencross, CEO, Calculus Capital