AIM is for growth not just tax relief  

Investing in well-established AIM listed companies has delivered significant outperformance relative to the UK main market, and indeed other international stock markets, over recent years.

The AIM index finished 2020 up 20% for the year, an amazing achievement in the circumstances, significantly outperforming the main UK index of 100 stocks which fell 15%. This represented the biggest one-year differential in AIM’s 26-year history. Our associates Investor’s Champion provided a review of AIM’s electrifying performance in 2020 in this update here.

AIM’s strong performance in 2020 was not just a flash in the pan and over the 5 years to the end of December 2020, the AIM All share index was up 60% whereas the main UK market was up only 11%.

We acknowledge that this excludes dividend income, and the main UK market has yielded over 4% per annum over this period, however, 2020 highlighted the fragility of dividends for highly geared companies on the main UK stock market, many of which were forced to cut or postpone dividend payments.

AIM’s outperformance over the past 5 years is all the more impressive considering the fall in the number of companies on AIM over this period with 816 companies on AIM at the end of January 2021 compared to 982 at the end of 2016. The net result is that the AIM of today consists of a far greater number of good quality businesses, many of which are delivering far more impressive growth than their peers on the main market and are also suitable for AIM Inheritance Tax portfolios.

As individuals own 25.1% of AIM companies, against just 11.3% of FTSE 100 companies, UK private investors will also have benefited very nicely from this outperformance and supported many fast growing UK businesses.

To benefit from the Inheritance Tax planning reliefs, individuals need to own the qualifying AIM shares directly in a segregated portfolio in their own name i.e. the tax benefit cannot be gained through investing via a collective/fund structure.  In support of this, a growing number of financial advisors embrace AIM and AIM Inheritance Tax portfolios, which can also be accessed through a number of advisor wrap platforms.

Inheritance Tax relief is clearly a key attraction for many private investors in AIM, but we urge prospective investors to focus on the investment benefits, which have proven to be even more compelling reasons to invest in AIM over recent years.

The pandemic has had an unprecedented impact on jobs, businesses and livelihoods. As the vaccination program rolls out, attention is beginning to shift towards rebuilding and getting the UK economy back on track.

AIM is one of the most successful growth markets in the world and makes a huge contribution to the UK economy, with research suggesting that AIM companies contribute over £33bn Gross Value Added directly to the UK economy, and just as much indirectly. It is a market for young, dynamic and innovative companies and provides a market-place for them to raise equity capital supporting their innovation, driving productivity and creating employment.

Join us for our webinar at 2pm on 25th February 2021 where we will be discussing just how valuable AIM is to the UK economy and the opportunities in 2021.

You can register from the link here.

You can find out more about Fundamental Asset Management’s high performing AIM IHT ISA and AIM Inheritance Tax portfolio service, which has been delivering exceptional investment returns for more than 16 years, from the link here. We also have an Adviser Centre with a wealth of information to support financial advisers including case studies, adviser webinars, guides and contact details