Inheritance Tax (IHT) receipts were up again April 2022 to February 2023. Compared to the same period in the previous year, there was an increase of £0.9bn with a total of £6.4bn being received. This serves as a timely reminder of the ISA Deadline for clients who wish to deposit new or additional funds with Fundamental Asset Management’s AIM IHT portfolio service.

ISA DEADLINE DATES

Existing clients: 5th April.
New clients: 3rd April at the latest (assuming all information needed has been provided).

With HMRC IHT receipts up again, don’t miss out on this year’s ISA allowance. Whole or part of existing ISAs can be transferred (subject to the existing ISA manager) to potentially reduce IHT further.

Our last webinar AIM ISAs here.

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 to close the year, Chris Boxall, co-founder of AIM specialist investment manager Fundamental Asset Management, discusses some of the key developments on AIM in 2022 and considers the opportunities for investors in AIM in 2023.

You can watch the interview by clicking the image above.

Companies discussed include Abcam, CVS Group, EMIS, Impax Asset Management, Jet2 and RWS Holdings.

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.

All portfolios are managed by the same team of managers and researchers that have delivered exceptional returns since the firm’s founding in 2004.

You can find out more from the link here or by contacting [email protected] or calling 01923 713894.

The AIM Dividend Monitor from Link Group suggests the total dividend payout from AIM companies will 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 may actually exceed this level.

Rising dividend yields

The strong rebound in dividend payments has coincided with a steep decline in the share prices of many AIM companies with the result that dividend yields of sizeable and well-established AIM companies have risen substantially, to levels not seen in the 18 years we have been managing AIM portfolios.

New AIM IHT Income Portfolio

We have been contemplating the launch of an income focused AIM IHT service for several months following discussion with advisers and clients. The quality of companies on AIM has improved considerably over recent years making this a far more viable AIM IHT planning solution than was previously the case.

Fundamental Asset Management’s new AIM IHT Income Portfolio will follow a fixed model, with equal investment in the shares of 30 Inheritance Tax qualifying AIM companies, well-diversified across sectors and industries. The current estimated forecast dividend yield from the portfolio is 5.25% (December 2022).

There is currently minimal cross-over with stocks in our long-running AIM IHT Growth portfolio. The average market capitalisation of stocks in the AIM IHT Income Portfolio is £269m compared with an average market capitalisation of £565m for the AIM IHT Growth portfolio.

Chris Boxall, co-founder of Fundamental comments:

“Up to now, our predominant focus when investing in AIM is on capital growth. However, our research has uncovered a large number of sizeable AIM companies, previously considered for their growth prospects, now offering compelling dividend yields. When we looked at this many years ago, higher-yielding AIM companies were firmly ex-growth and subscale, however, this is no-longer the case”.

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.

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

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.