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Webinar – AIM: cheap for good reason or bargains to be snapped up?

Is it time to be greedy when others are fearful?

It has been a painful time recently for AIM investors. In the upcoming Fundamental Asset Management webinar on Wednesday 12th October at 3pm we ask: AIM: cheap for good reason or bargains to be snapped up?

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

Fundamental’s portfolio managers Chris Boxall & Stephen Drabwell will be reviewing the last quarter as well as looking ahead to Q4.

AGENDA
– Q3 Review.
– What lies ahead for Q4.
– It has been a terrible time for AIM stocks; could now be the time to invest?
– Trading performance vs share price performance.
– Valuations.
– Impact of “mini budget”.
– Questions.

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


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Weak pound means opportunity for AIM’s exporters

The pound is trading near its lowest level against the US dollar since 1985, a year which also saw Mikhail Gorbachev become the leader of the Soviet Union, Boris Becker become the youngest winner of the Wimbledon Men’s singles title and England win the Ashes.

The popular press is revelling in the current gloomy economic backdrop and while times are indeed challenging, notably from an energy and inflationary perspective, the UK’s weak currency could offer a terrific opportunity for UK exporters.

Thankfully there are plenty of these on AIM, with many having seen their share prices and valuations tumble over recent months, offering a compelling buying opportunity for patient investors, particularly with those with an eye on the Inheritance Tax planning benefits.

One of our long-term AIM portfolio holdings AB Dynamics has seen its shares fall substantially from 2021’s highs. With its headquarters in Bradford-on-Avon, near Bath, AB Dynamics is a manufacturer of advanced testing, simulation and measurement products for the global automotive sector – we covered this excellent company previously in a Blog here. AB Dynamics is a major beneficiary of the transition to electric vehicles, supporting nearly all the world’s car manufacturers. In 2021 over 90% of its revenue was derived from outside the UK, including 24% from North America and 50% from the Asia Pacific region. With its main manufacturing facilities in the UK, the weak pound could therefore be helpful to business.

AIM going cheap, especially for US buyers

The weak pound and tumbling share prices also make UK listed companies more appealing to overseas buyers and there have been several offers and recommended bids for UK Technology companies over the summer, including two on AIM.

This week brought news that GB Group, experts in digital location, identity verification and fraud software and one of our newer AIM portfolio holdings, is currently considering a possible cash offer from GTCR, a US-based private equity business.

Shares in GB Group hit a 5 year low in early July, despite not having had any operational issues and meeting the market’s expectations.

The share price of GB Group leaped in response to the latest news, but still remains well down on year highs, with many anticipating that rival bidders will emerge.

If share prices remain depressed, we anticipate that many other good quality UK listed AIM companies, will be snapped-up by cash rich overseas buyers.

As we commented in our previous Blog here, AIM’s well-established technology related companies, notably in the software arena, look particularly vulnerable to approaches, given their proven business models, cash generative attributes and largely debt-free balance sheets.

 

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

 

Our Webinar here covered many of the key questions clients ask when considering investing in AIM shares for Inheritance Tax Planning purposes. You can watch a recorded version of the webinar from the link here.

This video presentation here also provides a brief introduction to the Fundamental AIM IHT portfolio service.


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Inflation proofed returns from AIM

Since arriving on AIM in 2011 at 60p per share (currently 930p) and a market capitalisation of only £50m (currently £1.25 billion), Glasgow headquartered Smart Metering Systems (‘SMS’) has evolved into a fully integrated energy infrastructure company.

SMS is a long-term holding in Fundamental Asset Management’s AIM IHT portfolios.

The global energy market has changed rapidly over the last few months and the requirement for a low carbon, flexible and secure energy system has never been greater or more acute.  The core focus of SMS is to facilitate a lower cost, lower carbon energy future.

At the time of its arrival on AIM, SMS was primarily a provider of gas infrastructure connection services and gas meter asset management services. It had also developed advanced smart metering technology solutions. Fast forward to the present time and the enlarged group now provides total energy solutions for its customers, helping businesses and consumers use energy for the better, with the aim of achieving a greener and more sustainable energy system.

In addition to their core meter asset management business, SMS now independently develops, owns and operates Battery Energy Storage Systems (BESS) that serve a greener, resilient, and more flexible grid and independent Electric Vehicle (‘EV’) charging solutions.

Inflation proofed returns

A positive trading update for its first half to 30 June commented how the installation of smart meters continued to pick-up with 230,000 installed during the first half of 2022, and the average monthly installation rate rising to 40,000 meters. As a result, the Group’s total smart meter portfolio increased to 1.9 million meters, with the order pipeline c.2.42 million meters.

The Group’s growing portfolio of smart meters supports plenty of reliable, inflation proofed, Index Linked Annualised Recurring Revenue (‘ILARR’), to which an annual RPI adjustment of +4.3% was applied on 1 April 2022.

The UK smart meter rollout continues to present a significant opportunity to grow their ILARR, with Ofgem requiring energy suppliers to exchange at least 85% of all meters to smart by the end of 2025. Ofgem has also proposed mandatory settlement of energy on a half-hourly basis, which would significantly increase the market size for these services from c.300,000 electricity meters to over 26 million meters by 2026.

SMS’ first grid-scale battery site (Burwell, 50MW) commenced trading at the end of January 2022 and the site’s current performance is well ahead of expectations.

New developments

The Group’s new Solopower solution, which was launched in 2021, aims to radically reduce carbon emissions within the UK’s social housing stock using solar generation and battery storage. Pilot projects are being progressed in over 1,000 homes across the UK, as well as early-stage projects in the Republic of Ireland.

Sustainability

The SMS website highlights how their investment case is rooted in sustainability, with its Sustainability Report providing detailed disclosure on the practical steps being taken to progress Environmental, Social and Governance (ESG) responsibilities within their business strategy, culture, and everyday operations.

Their ‘net-zero by 2030’ target will see SMS drastically reduce their organisational carbon emissions to achieve a balance between the amount of greenhouse gas emissions produced and the amount removed from the atmosphere.

Green Economy Mark

SMS carries the London Stock Exchange’s Green Economy Mark. This recognises London-listed companies and funds that derive more than 50% of their revenues from products and services that are contributing the environmental objectives such as climate change mitigation and adaptation, waste and pollution reduction, and the circular economy.

 

Inheritance Tax receipts hit another record

HMRC’s latest figures show that Inheritance Tax (IHT) receipts for April 2022 to July 2022 were £2.4 billion, that’s £0.3 billion higher than in the same period a year earlier.

The Office for Budget Responsibility (‘OBR’) forecasts that as many as 6.5 per cent of estates could be liable for Inheritance Tax by 2026 – 75 per cent more than the 3.7 per cent that the figures show for the latest financial year.

With the AIM market down substantially from 2021 highs, now could be a great time to consider investing in qualifying AIM shares as part of a sustainable Inheritance Tax plan.

To find out more about the benefits of investing in AIM for Inheritance Tax planning purposes, where sustainability is also a key consideration, please speak to our Business Development Manager Jonathan Bramall via email [email protected]  or phone 01923 713 894.

This video presentation here provides a brief introduction to the Fundamental AIM IHT portfolio service, while our webinar here reviews the second quarter of the year and discusses our ESG and PRI developments.

 

Fundamental Asset Management
www.fundamentalasset.com


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Will your money help HMRC break another record?

Will your money help HMRC break another record?

HMRC’s latest figures released today show that Inheritance Tax (IHT) receipts for April 2022 to July 2022 are £2.4 billion; £0.3 billion higher than in the same period a year earlier.

Will your family have to pay IHT to HMRC after you have passed on? If this is something you wish to help your loved ones avoid, investing in qualifying AIM stocks could be for you.

If a client invests in certain AIM shares that qualify for Business Relief for 2 years and provided they are still held at death, the estate will not pay Inheritance Tax on them – a saving of 40%. Fundamental Asset Management’s AIM Inheritance Tax portfolio can help you plan for your family’s future.

Inheritance Tax mitigation

A Fundamental AIM Inheritance Tax portfolio achieves 100% mitigation from Inheritance Tax after only two years. Not seven years as is the case through a gifting or trust approach.

Existing ISAs can also be transferred to Fundamental providing greater potential savings for your loved ones.

This video presentation here provides a brief introduction to the Fundamental AIM IHT portfolio service, while our webinar here reviews the second quarter of the year and discusses our ESG and PRI developments.

To find out more about the benefits of investing in AIM for Inheritance Tax planning purposes, where sustainability is also a key consideration, please speak to our Business Development Manager Jonathan Bramall via email [email protected]  or phone 01923 713 894.


Fundamental Asset Management
www.fundamentalasset.com


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No initial fee for advised clients investing Direct

No initial fee for advised clients who invest Direct

To further support advisers, from Monday 27th June, advised clients who directly invest in Fundamental Asset Management’s AIM IHT Portfolio Service will no longer be charged an initial fee.

The scrapping of any initial fee is part of our ongoing commitment to support advisers and aligns with our fee structure for portfolios managed through wrap platforms (Eg Abrdn Elevate & Wrap, Funds Network, Nucleus, Standard Life, Transact etc.).

If you would like an illustration, please contact our Business Development Manager Jonathan Bramall via email [email protected] or phone 01923 713 894.

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

 

 

Fundamental Asset Management
www.fundamentalasset.com


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The Fundamentals #9 – Our Investment Approach

In the ninth of our series – The Fundamentals – about going back to the basics of investing in AIM shares for Inheritance Tax (IHT) planning purposes, we look at the Fundamental Asset Management investment approach.

The Fundamental Asset Management investment approach is best described as, stock specific and growth focused, with a value overlay.

Key criteria include:

  • IHT qualification (current and ongoing)
  • Growth actual and prospective
  • Profitability (unadjusted, we have a strong dislike of the fairy tale EBITDA!)
  • Cash generation
  • Return on Equity
  • Management/insider ownership
  • Valuation measures
  • Size and liquidity – an ability to sell if we need to
  • Understanding of the business

Dividend yield is appreciated, but not essential, as small growing companies, generating high returns on equity, should generally have better things to do with their cash than pay it away.

Macro overlay ensuring sector diversification. Research is undertaken by the 2 portfolio managers Chris Boxall and Stephen Drabwell supported by external analysts (former fund managers, private investors and business people).

For more information on Portfolio Construction Methodology, Approach to Stock Picking, Asset Allocation, House Investment Style, and “House Ethos”, or if would like to speak with Stephen or Chris, please do not hesitate to contact our Business Development Manager Jonathan Bramall via email [email protected] or phone 01923 713 894.

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

The Fundamentals Series

Our Educational Webinars also provide plenty of further information.

Fundamental Asset Management
www.fundamentalasset.com


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The Fundamentals #8 – A profile of our investment team

In the eighth of our series – The Fundamentals – about going back to the basics of investing in AIM shares for Inheritance Tax (IHT) planning purposes, we look at the Fundamental Asset Management Investment Team.

Since 2004, Fundamental Asset Management portfolios have been managed by our two founders Chris Boxall and Stephen Drabwell.

Chris and Stephen are experienced investment managers who have been managing the portfolios in-house since inception. Chris and Stephen conduct all research supported by external analysts (former fund managers, private investors and business people).

STEPHEN DRABWELL

STEPHEN DRABWELL

Stephen Drabwell is a co-founder, major shareholder and director of Fundamental Asset Management. Stephen oversees the trading, asset allocation and operational aspects of managing the many AIM IHT portfolios that the company oversees. Prior to founding Fundamental, Stephen started his career at the investment bank, UBS in 1990. Following 9 successful years at UBS, which saw him progress to becoming a sales trader on the European portfolio trading desk, Stephen joined Washington Asset Management where he was senior trader for a US Long/short hedge fund. Stephen helped grow the fund from $30m to $250m before leaving in 2004 to start Fundamental.

CHRIS BOXALL

CHRIS BOXALL

Chris Boxall is a co-founder, major shareholder and director of Fundamental Asset Management. Chris qualified as a Chartered Accountant in 1989 and has primary responsibility at Fundamental for company research and portfolio management for the firm’s equity portfolios, with particular focus on AIM. Prior to Fundamental Chris oversaw activities at the Washington Financial Group, where he was a key member of the investment management team of the Washington US Fund Ltd, a successful equity fund.

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

If you have any questions or would like to speak with Stephen or Chris, please do not hesitate to contact our Business Development Manager Jonathan Bramall via email [email protected] or phone 01923 713 894.

The Fundamentals Series

Our Educational Webinars also provide plenty of further information.

Fundamental Asset Management
www.fundamentalasset.com


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The Fundamentals #6 – How long do you need to hold a qualifying stock for it to receive IHT relief?

In the sixth of our series – The Fundamentals – about going back to the basics of investing in AIM shares for Inheritance Tax (IHT) planning purposes, we look at How long do you need to hold a qualifying stock for it to receive IHT relief?

We recently ran a webinar for financial advisers where we answered questions on How to use AIM for Inheritance Tax Planning? We received a number of questions regarding the length of time shares must be held to benefit from IHT relief. With the risk warning that we are not tax advisers as well as that tax benefits depend on circumstances and tax rules can change, we have put our understanding of the rules below.

What is the length of time a Business Relief (BR) qualifying stock must be held so a client’s estate does not need to pay Inheritance Tax?

  • A share (and any replacements) must have been held for at least a total of 2 years and still be held on death.
  • The company must still qualify for Business Relief at the time of the investor’s death.

Does the overall AIM portfolio need to be held for 2 years to claim BR or is it on a share by share basis?

  • It is on a share by share basis.

If a qualifying stock is sold and new qualifying stocks are purchased, does that reset the clock?

  • As long as the whole of the money from the sale of the stock is reinvested, the calendar does not reset.

Does HMRC publish a list of qualifying AIM stocks which, if held for 2 years, would qualify for IHT relief?

  • No, HMRC doesn’t produce a list but this is where using experts such as Fundamental Asset Management comes into play. Not only do we select stocks based on the qualifying criteria but we also keep them under review in case their Business Relief qualifying status changes. It is also worth noting that as well as the potential of saving 40% on IHT, our AIM for IHT portfolio service has seen historical growth that has outstripped other indices and competitors over many years.

For more information about reducing Inheritance Tax by using Business Relief click here.

If you have any questions, please do not hesitate to contact our Business Development Manager Jonathan Bramall via email [email protected] or phone 01923 713 894

The Fundamentals Series

Our Educational Webinars also provide plenty of further information.

Fundamental Asset Management
www.fundamentalasset.com


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The Fundamentals #4 – What is the Fundamental AIM Inheritance Tax Portfolio?

In the fourth of our series – The Fundamentals – about going back to the basics of investing in AIM shares for Inheritance Tax (IHT) planning purposes, we look at: the Fundamental AIM Inheritance Tax ISA Portfolio.

Inheritance Tax planning is not only for those with high net worth. It is a tax which is paid in record numbers (HMRC figures released March 2022) by thousands of people in the UK every year. But it is avoidable with a good Inheritance Tax plan. That is why we would recommend you speak to a financial adviser before making any investment decisions.

The Fundamental AIM Inheritance Tax Portfolio has the objective of obtaining 100% relief from Inheritance Tax, as well as the potential for capital appreciation, by investing into qualifying AIM quoted companies. The Fundamental AIM Inheritance Tax Portfolio is an effective, proven and non-contentious tax planning method which avoids the costs, administration and loss of control associated with forming a trust or gifting.

Growth potential

Holding a Fundamental AIM Inheritance Tax Portfolio means you will benefit from the growth opportunity AIM presents as one of the most successful growth markets in the world.

Inheritance Tax mitigation

A Fundamental AIM Inheritance Tax portfolio achieves 100% mitigation from Inheritance Tax after only two years. Not seven years as is the case through a gifting or trust approach.

Retain access to your assets

Holders of the portfolio retain assets in their own name, which means you will not lose control of your assets and have the freedom to redeem some, or all, of your holdings at any time.

ISA benefits

A Fundamental AIM Inheritance Tax Portfolio can be wrapped in an ISA which means you benefit further from no Income or Capital Gains Tax on growth. An ISA can also be left to a surviving spouse in its entirety tax-free through Additional Permitted Subscription. We explain more about the AIM ISA here.

How do I transfer my existing ISA to Fundamental?

If you are looking to transfer your existing ISA to a Fundamental AIM ISA then all you have to do is complete our application and transfer forms and email them to: [email protected], alternatively please call 01923 713 894 .

Please note, if you withdraw your investments from your ISA instead of transferring them, you will lose your ISA benefits and we will not be able to include them into a new Fundamental AIM ISA if that sum is higher than your current year allowance. Transfers can be made in stock and/or funds (with some exceptions) and cash. To retain previous years ISA allowance, please complete our ISA transfer form. Generally, the ISA transfer process can take anything up to six weeks for transfer proceeds to be received by Fundamental from your previous provider.

Looking for a quote?

Email details to us at [email protected] and we will be happy to pull together a personalised illustration for you.

The Fundamentals Series

If you have any questions, please do not hesitate to contact our Business Development Manager Jonathan Bramall via email [email protected] or phone 01923 713 894

Our Educational Webinars also provide plenty of further information.

Fundamental Asset Management
www.fundamentalasset.com


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The Fundamentals #3 – The perils of exit fees & support for a client’s estate

In the third of our series – The Fundamentals – about going back to the basics of investing in AIM shares for Inheritance Tax (IHT) planning purposes, we look at: the perils of exit fees & support for a client’s estate.

Perils of exit fees

When someone decides to invest, one of the last things they think about is; ‘what are the exit fees if I need to withdraw my money’?

Unlike some of our peers, we don’t charge exit fees. We want people to be with us for the long-term in order to gain from the potential opportunities of our AIM portfolio service, but if someone needs to take their money, we do not think they should be charged for the “privilege”.

Feeling withdrawn?

You can take your money out of your portfolio whenever you need to by contacting us – this is true for AIM IHT portfolios and AIM IHT ISAs. We run flexible ISAs which means you can disinvest and reinvest funds within the same ISA tax year. Money withdrawn may lose tax benefits and could form part of your taxable estate at death. We do not apply a minimum withdrawal amount.

Costs to clients’ estates

In this world nothing can be said to be certain, except death and taxes” Benjamin Franklin famously wrote in 1789. Whilst our AIM IHT portfolio service is designed to try to disprove the second part of the saying by saving on the Inheritance Tax a client’s estate must pay; we all know that death will eventually catch us all. When death does come, we support the Executors of the estate. At a difficult time, we provide the information HMRC requires at no additional charge. Again, sadly, not all AIM asset managers provide this support.  For more information about reducing Inheritance Tax by using Business Property Relief click here.

The Fundamentals Series

If you have any questions, please do not hesitate to contact our Business Development Manager Jonathan Bramall via email [email protected] or phone 01923 713 894

Fundamental Asset Management
www.fundamentalasset.com