In this third episode of The Fundamental Asset Podcast, Chris Boxall, co-founder of Fundamental Asset Management, covers three UK small cap stocks which have recently issued positive updates.

Castings (CGS), with squeaky clean reporting and a nice dividend, Kooth’s (KOO) big contract win in the United States and Kitwave’s (KITW) consistent delivery, in more ways than one! In a difficult market for small caps these are some shining lights.

In contrast at the other end of the scale, Chris discusses Marlowe (MRL) and Gooch & Housego (GHH) and their acquisition strategies. The Fundamental team has been doing some deep research into Marlowe (MRL) and Chris shares some of those insights in this conversation.

You can listen to the podcast from the link here (Note: this links you to the Fund Your Retirement site)

Fundamental’s AIM IHT ISA and General portfolio is a discretionary investment management service where clients can obtain 100% mitigation from Inheritance Tax, benefit from the capital growth and income afforded by the AIM market and retain control of their assets.

Fundamental now offers its standard AIM IHT Growth Portfolio, as well as its new AIM IHT Income Portfolio service.

Webinar: AIM a Half Year Update

Join Fundamental Asset Management Co-Founders Chris Boxall & Stephen Drabwell on Tuesday 18th July at 3pm as they look at “AIM a Half Year Update”. The webinar is CPD eligible.

Your seat can be reserved for “AIM a Half Year Update” by going to the quick registration page here. This will also allow you to watch the webinar on demand after the event.

You can find out more about Fundamental Asset Management’s AIM portfolio service from the link here or by contacting [email protected] or calling 01923 713894

INHERITANCE TAX RECEIPTS UP

HMRC data released this morning show Inheritance Tax (IHT) receipts reached £600 million in April 2023, which is £100 million higher compared to the previous tax year’s April figures.

Commenting on the rise, Jonathan Bramall, Business Development Manager at Fundamental Asset Management said:

“Due to years of increasing house prices, high inflation rates, and tax freezes, more families who do not consider themselves wealthy are now exceeding the threshold for IHT.”

A large factor in the increase in Tax receipts is down to more people being caught outside of the tax-free inheritance allowance known as the nil-rate band. Each individual can pass on up to £325,000 of their estate without being liable for any IHT. Amounts exceeding £325,000 may be subject to a maximum IHT rate of 40%. Despite inflation reducing the value of this relief by 32.8% since April 2009, and average house prices rising by nearly 85%, the nil-rate band has remained unchanged – meaning more estates are having to pay IHT to HMRC.

An established tactic for individuals concerned about IHT is using AIM listed companies which are eligible for Business Relief to reduce their potential liability. The easiest way to do this is using an AIM specialist firm that specialises in investing in AIM for IHT planning. For more information click here.

STAMP DUTY RECEIPTS DOWN

HMRC did see a fall in Stamp Duty receipts of £0.7bn compared to the same period in 2022. This is due to the property market being hit by a combination of factors including the cost-of-living crisis, the disastrous mini-Budget and Stamp Duty changes.

Fundamental Asset Management’s AIM Inheritance Tax portfolio service can help you leave more of your money to your family instead of HMRC. To find out more about the benefits of AIM, please speak to our Business Development Manager, Jonathan Bramall, via email [email protected] or phone 01923 713 894.

With today’s HMRC announcement that Inheritance Tax (IHT) Receipts are up £1billion to £7.1bn, Fundamental Asset Management give some tips for keeping the money you want to leave your family out of the Chancellor Jeremy Hunt’s hands. Fundamental’s portfolio manager, Chris Boxall explained:

“Using AIM for IHT is the easy, non-contentious way of getting IHT relief on investments on behalf of your estate when you pass away; keeping Jeremy Hunt’s hands (or whoever is the Chancellor at the time) off your money.”

Fundamental Asset Management’s Top Tips:

1)

Do you have old ISAs that are going to form part of your estate upon death? You might wish to transfer these into an AIM IHT Portfolio to save up to 40% of their value through IHT relief. Fundamental Asset Management accept transfers-in of old ISAs.

2)

Consider if “only” using this year’s ISA allowance is going to reduce your IHT liability as much as you want in the long run. You may also want to invest in a non-ISA AIM IHT portfolio to allow your family the opportunity to potentially inherit more of your money when the time comes.

3)

View the investment to be over at least a 5-year period. If you cannot afford to be without this money, it may be that this investment is not right at this time. It also potentially enables you to better see the investment opportunities AIM can deliver.

Remember, for your estate to not pay Inheritance Tax on the investment – a saving of 40% – your investment needs to be in certain AIM shares that qualify for Business Relief. The shares need to:

• Be held for 2 years or more and still held at death; and
• Be held in a company that still qualifies for Business Relief at the time of the investor’s death.

Fundamental Asset Management’s AIM Inheritance Tax portfolio service can help you leave more of your money to your family instead of HMRC. To find out more about the benefits of AIM, please speak to our Business Development Manager, Jonathan Bramall, via email [email protected] or phone 01923 713 894.

When investing in smaller quoted companies and particularly those on AIM, the predominant investor focus is of capital growth, as opposed to dividend income. Indeed, the London Stock Exchange’s description of AIM as being a “Market for small and medium size growth companies” highlights the junior market’s primary purpose.

While our firm would never advocate investing in AIM quoted companies for reliable dividend income, the fall in the share prices of many cash generative AIM companies over the course of 2022, many of which have a long track record of dividend payments, has served to highlight the income potential from AIM, not to mention the modest valuations of many companies previously considered for their growth appeal.

AIM quoted Wynnstay Group, a supplier of agricultural products and services to the UK’s arable and livestock farmers, recently reported fabulous full year results with earnings up 86% and a near 10% increase in its dividend, making it 19 consecutive years of dividend increases since Wynnstay joined AIM in 2004.

Link Group’s AIM Dividend Monitor from September 2022 suggested that the total dividend payout from AIM companies would reach £1.22bn in 2022, which will be close to the record payout of £1.29 billion in 2019. Our assessment suggests that dividend payments in 2022 may actually exceed this level.

The strong rebound in dividend payments and steep decline in share prices in 2022 means that the dividend yields of well-established AIM companies have risen substantially, to levels not seen in the 19 years my firm has been managing AIM portfolios.

Returning to the earlier point of AIM being primarily a market for growth companies, it’s worth emphasising that many of these current AIM high-yielders also have considerable growth attractions.

The founder management of one fast-growing and cash generative AIM company, with an attractive dividend yield, has clearly had enough of AIM’s ‘mispricing’ of their shares, engineering a deal to take the company private, with the help of an enthusiastic private equity backer. They were probably getting fed-up of being considered for their income, rather than growth attractions! Other cash generative AIM companies, may follow suit if their share prices continue to languish.

It’s noticeable that many mature AIM companies with surplus cash have also initiated share buy backs and special dividend payments.

Footwear retailer Shoezone announced an additional special dividend at the time of its full year results, which reported 55% growth in earnings per share. It is also committed to a significant share buyback programme.

The high dividend yields of many AIM companies bely their considerable long-term growth attractions.

Another attraction for many private investors when investing in AIM quoted companies is the potential to save future Inheritance Tax (‘IHT’) – shares of ‘Business Relief qualifying’ AIM companies fall outside the holder’s estate for IHT purposes if held for 2 years or more.

Those investing in AIM for IHT planning purposes for the first time may often be transferring out of income generating funds and equities. The idea of regular dividend income from a portfolio of AIM shares may therefore be appealing.

A word of caution

It is evident that most AIM companies generating strong cash and attractive returns on capital should prioritise re-investment in their business to help drive growth, over and above paying out large dividends to shareholders.

Some AIM companies might not be re-investing enough in their operations, with a risk that trading will ultimately suffer. Worse, having previously paid out large cash dividends, companies are subsequently forced to raise further equity from shareholders in support of acquisitions, at considerable expense and dilution to existing shareholders. In this case, it would surely have been better for the company to have held back its previous generous dividend payments.

There are many aspects to consider when assessing the income appeal of AIM companies, however, just because the dividend yield is high doesn’t mean the company no longer has capital growth attractions as well – it’s possible to find both from AIM’s many excellent companies.

Our recent WEBINAR: What does 2023 have in store for AIM? also covered the income attractions of AIM. You can watch the webinar from the link here.

To find out more about the Income benefits of AIM, please speak to our Business Development Manager, Jonathan Bramall, via email [email protected]  or phone 01923 713 894.

Join Fundamental Asset Management’s Co-Founders Chris Boxall & Stephen Drabwell on Tuesday 31st January at 3pm as they look at the risks and opportunities for AIM in 2023.

They will review 2022 and look into their crystal ball for 2023. What happened to AIM in terms of its size and overall performance? The webinar is titled What does 2023 have in store for AIM? This webinar is CPD eligible.

To register your spot and to be able to watch it after the event, please click here.

TOPICS TO BE COVERED:
– Brief introduction to AIM for Inheritance Tax (IHT) planning
– Recap on performance in 2022
– AIM IHT investing universe 2023
– Company valuations
– Results and updates January 2023
– Growth or Income AIM IHT portfolios?

For more information about reducing Inheritance Tax using Business Relief (also known as Business Property Relief) click here.

To find out more about the benefits of investing in AIM shares for IHT planning purposes, please get in touch via email at [email protected] or phone 01923 713 894

As the provider of the best performing stock tip of 2022, a rare positive in a horrid year for AIM and client portfolios, the Telegraph’s Questor column once again turned to Chris Boxall, portfolio manager at Fundamental Asset Management, for their Questor AIM IHT share tip for 2023.

The latest request coincides with the launch of Fundamental’s new AIM IHT Income Portfolio service, so Chris thought it was appropriate to suggest an income stock and one of the new holdings in the new income portfolio for the “Tip of the Year” stock – the 8% dividend yield being the primary appeal in the short-term.

If you have a subscription, you can read The Telegraph article online here.

The new Fundamental AIM IHT Income Portfolio is available on Fundamental’s own designated broker platform or via a range of IFA wrap platforms including Abrdn (formerly Standard Life) Wrap & Elevate, Fidelity Funds Network, Nucleus, Transact, M&G Wealth and others. It is available in both an ISA and General Investment Account.

You can find out more about our AIM IHT Income Portfolio in our webinar here and video interview here.

To find out more about the benefits of investing in AIM, or if you wish to discuss the current situation, please speak to our Business Development Manager, Jonathan Bramall, via email [email protected] or phone 01923 713 894.

In this video interview, Chris Boxall, co-founder of AIM specialist investment manager Fundamental Asset Management, discusses the opportunities for income investors in AIM IHT ISA portfolios.

With AIM companies set to pay out just over £1.2 billion in dividends in 2022 there are plenty of high yielding AIM stocks to choose from, although prospective investors need to be wary of certain factors as Chris highlights.

You can watch the interview by clicking the image above.

The interview coincides with the launch of Fundamental’s new AIM IHT Income Portfolio service which was also covered in a recent webinar here.

DIFFERENCES BETWEEN THE EXISTING AIM IHT GROWTH PORTFOLIO VS THE AIM IHT INCOME PORTFOLIO?

The existing AIM IHT Growth Portfolio is a discretionary investment management service where clients can obtain 100% mitigation from Inheritance Tax, benefit from the capital growth afforded by the AIM market and retain control of their assets. Fundamental has been managing this portfolio since inception in 2004.

The new AIM IHT Income Portfolio is designed for clients to still take advantage of the potential Inheritance Tax relief afforded by the AIM market and retain control of their assets, at the same time as providing a greater level of dividend income.

To find out more about the benefits of investing in AIM, or if you wish to discuss the current situation, please speak to our Business Development Manager, Jonathan Bramall, via email [email protected]  or phone 01923 713 894.

AIM isn’t a market that’s generally considered for its dividend and income attractions, and we have always expressed caution on AIM companies paying out high dividends, when they should be putting their cash to better use.  However, the steep decline in share prices of many good-quality AIM companies has seen dividend yields soar to levels not seen since we started managing AIM IHT planning portfolios back in 2004 and the AIM of today is thankfully a far better market than it was back then.

With many AIM companies sitting on plenty of supportive cash, but their share prices languishing, these high yielders also have growth attractions.

We therefore thought it was an appropriate time to reassess the dividend and income potential of AIM companies for IHT planning purposes.

Join us for our webinar AIM IHT portfolios for INCOME? Is it worth it? on 25^th November at 3pm. We will discuss the benefits and potential pitfalls of investing in Inheritance Tax qualifying AIM companies for income generation and the potential yield available.

The webinar will cover a number of topics including:

• State of the AIM market
• The investable universe of big dividend paying AIM stocks
• Dividend yields and dividend cover
• Quality of AIM companies
• Interest rate considerations
• Fundamental Asset Management’s high yield AIM portfolio solution
• Sectors and industries.
• Portfolio management

Sign up to the webinar from the link here

The Fundamental AIM IHT Portfolio is a discretionary investment management service where clients can obtain 100% mitigation from Inheritance Tax, benefit from the capital growth afforded by the AIM market and retain control of their assets.

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 18 years, from the link here.

To find out more about the benefits of investing in AIM, or if you wish to discuss the current situation, please speak to our Business Development Manager, Jonathan Bramall, via email [email protected]  or phone 01923 713 894.

Global Markets Continue to Struggle

The outlook for global economies continues to look challenging, with high inflation and rising interest rates potentially tipping many countries into recession.

As a result, global stock markets, led as usual by the US, have been suffering for quite a while. Unfortunately AIM has not been immune to this, with the AIM index now down over 33% year to date.

The bear market since the summer of 2021 is one of the longest we have seen in our 30+ years in investment management. Even the financial crisis of 2008 did not last as long as this and we can only hope that we are somewhere near turning the corner.

Certainly, the recent updates from our core portfolio holdings have been largely positive, despite the challenges they face, although this has not been reflected in their share prices!

What do we do we do at the moment? 

As we have previously mentioned, with the market not reflecting the general positive performance of many of the companies in our portfolios, the simple answer is, we do very little, other than drill down into the many results and updates being reported by companies and keep a very close eye out for bargains.

During previous periods of excessive volatility we recommend clients ignore the manic movements of share prices and unless there is a need to sell, the best cause of action is to continue wait for things to turn around, knowing we are well invested when the turnaround occurs.

It is worth remembering that in February 2020, the AIM market fell 36% in a month but it finished the year up 20%. A similar recovery took place after the Financial Crisis of 2007/8. We expect something similar in the near future, with the AIM of today a far higher quality market than it was in 2008.

During periods like this, we consider long-term holders of small cap shares should view the stock market as effectively closed, unless they are looking to buy a potential bargain.

Potential light at the end of the long tunnel?

Despite all of the negative news, today the Office for National Statistics announced that rather than contract as their previous reading suggested, the UK economy grew in the second quarter of this year by 0.2%. Whether this is the start of things beginning to improve remains to be seen.

Upcoming webinar

The next Fundamental webinar on Wednesday 12^th October at 3 pm is called AIM: cheap for good reason or bargains to be snapped up? It will be on looking back at the last quarter and reviewing the outlook ahead; including a focus on how have companies really been performing vs their stock price? To register for the webinar and to be able to view it after the event, click here.

To find out more about the benefits of investing in AIM, or if you wish to discuss the current situation, please speak to our Business Development Manager Jonathan Bramall via email [email protected]  or phone 01923 713 894.