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.

It has been a painful time for AIM investors across the board. Fundamental Asset Management portfolio managers have been giving their thoughts and insights into where the market is, how we got here and where it might be going. In addition, in a recent interview with Jeremy Naylor on IGTV, co-Managing Director Chris Boxall talks about specific stocks, the potential bargains and things to watch out for.

FUNDAMENTAL ASSET MANAGEMENT WEBINAR OCTOBER 2022

To view the new webinar please click on the following link – AIM: cheap for good reason or bargains to be snapped up? In the webinar, AIM in Q3 as well as Year To Date is reviewed, why we are where we are and what lies ahead.

IGTV INTERVIEW

For the interview with Jeremy Naylor click on Bargain hunting on AIM. In the interview, Jeremy Naylor of IGTV and Chris Boxall of Fundamental Asset Management, discusses potential bargains on AIM following recent falls.

AIM IHT PORTFOLIO

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.

Our last Blog here covered a stock market sell-off and what we are doing. This week we are doing things a bit differently.

Recently, we have received requests to go over some topics from the beginning to assist people who are trying understand what we do at Fundamental Asset Management as well as what AIM is, what opportunities it provides and how it can be used to help reduce Inheritance Tax (IHT).

Over the coming weeks, we will be going back-to-basics focusing on the fundamentals (pun intended!) of the AIM IHT Portfolio Service and indeed Fundamental Asset Management itself. We will be looking at how AIM could provide returns in the medium to long-term that put other investments in the shade as well as how Business Relief can be used for estate planning as well as some frequently asked questions around costs and a number of practical processes.

This week, The Fundamentals brings you a video we have put together; Fundamental Asset Management – An Introduction.

Topics covered include:

• Who Are We?
• What is AIM?
• AIM in 2021.
• AIM for outperformance.
• Business Relief & AIM – How it works.
• AIM IHT Investment Process – Investable Universe.
• AIM Investment Process – Core/ Satellite portfolio approach.
• AIM IHT Investment process – the issues!
• Benefits of a Portfolio – Not a Fund.
• AIM in 2022 – Difficult Start to the year.
• 2022 Opportunities so far.

In this video presentation, Chris Boxall, co-founder of AIM specialist investment manager Fundamental Asset Management, provides an introduction to the Fundamental AIM IHT portfolio service. The presentation covers Fundamental’s investment process and issues to be aware when investing in AIM for Inheritance Tax planning purposes. Chris also offers his thoughts on the outlook for AIM in 2022.

We hope you find it useful. 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

With tax allowances frozen by The Chancellor at the last Spring Statement and rising inflation there has been an increase in the number of people finding themselves with an inheritance tax issue. This is also affecting financial advisers who are spending more of their time helping clients with their Inheritance Tax planning to navigate this issue.

Something which helps both parties is that AIM shares can be held in a client’s ISA wrapper and on many adviser platforms.

Want to hear more? Join us for our webinar session on Wednesday 27^th October at 2pm where we will be discussing The benefits of Direct Equity Investment and AIM Quarterly Update.

AIM

AIM is the London Stock Exchange’s market for smaller companies. It has developed into the world’s most successful and established market for dynamic high-growth companies with access to a wide range of countries and sectors.

AIM is designed to help smaller companies access capital from the public market. AIM allows these companies to raise capital by listing on a public exchange with much greater regulatory flexibility compared to the main LSE stock market.

Business Property Relief

AIM shares that qualify for business property relief and held for at least two years do not form part of the estate for inheritance tax calculation purposes and can be passed on after death tax-free. This means AIM shares can be used to mitigate against the 40% potential inheritance tax bill which could apply to these assets.

The two-year clock starts ticking from the time you make the investment in qualifying shares. Subsequent investments start a new clock ticking so accurate records must be kept on different durations. If you sell after two years, you have three years to reinvest the proceeds back into qualifying shares for the benefit to continue without starting the two-year clock again. And lastly, you must be invested at the point of death.

AIM ISAs

AIM ISAs have been around since 2013, when the Government changed the rules to allow investors to hold AIM-listed shares within an ISA for the first time. This means qualifying business property relief AIM shares can be held within a tax- efficient stocks and shares ISA wrapper. AIM ISAs get the same tax breaks as other ISAs: any growth or income from the shares is tax-free.

The maximum amount you can pay into an AIM ISA in any given tax year is determined by the ISA allowance at the time as set by the government. For the current tax year 2021/2022 this is £20,000.

An investor can transfer their full current year’s ISA subscriptions or all or part of previous year’s ISA subscriptions into an AIM ISA. Transfers within an ISA should not create a CGT event.

Platforms

IHT solutions used to only be available directly with investment managers, with advisors forced to direct assets off their designated wrap platform in order to access these.

Adviser platforms have now evolved to let clients invest in individual stocks, including those listed on AIM, and even allow Discretionary Fund Managers (DFMs), such as Fundamental Asset Management, to manage portfolios of AIM stocks on platform on behalf of clients.

This means you can offer AIM for Inheritance Tax planning solutions to your clients and keep their assets in one place, thereby retaining the benefits a platform has to offer.

With a platform clients benefit from reduced dealing, product, custody and investment costs as well as giving them access to investment products they would not normally be able to access by going directly.

Advisers benefit from being able to manage everything in one place, reducing time on administration and allowing for more time to be spent with clients. Furthermore, the platform technology itself allows advisers to take advantage of an advanced reporting system.

Platforms are also beneficial for investment managers like Fundamental Asset. The ability to manage client portfolios in one place and to remove custody risk from our own business model is a key advantage. As such, we are committed to the IFA and platform markets and work closely with our platform partners, including Standard Life Wrap, Elevate, Nucleus, Transact, Ascentric and Funds Network.

You can hear more about the outperformance of AIM from our CPD adviser webinar session: Is AIM heading for a fall… or is its outperformance set to continue?

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 17 years, from the link here.

At the end of September 2021 there were 835 companies on AIM, with the total market value of London’s growth market £149 billion. This compares to 836 companies at the end of August 2021, when AIM’s market value was also £152 billion. September also saw a reduction in the number of AIM companies valued at over £1 billion falling to 28 from 30 in the previous month.

The AIM index as a whole fell 3.8% in the month, underperforming the UK index of 100 largest main market companies, which was only 0.46% lower. Looking at these numbers year-to-date AIM trails behind the FTSE 100 with 7.5% return against 9.69%.

However, this doesn’t tell the full story. AIM is a market with many growth focussed and successful businesses at the higher end but given its smaller company start-up nature it is also a market with companies yet to come into their own and even others which are yet to make a profit. In fact, since the start of this year, AIM has welcomed 61 newcomers coming from a broad range of sectors with market capitalisations extending up to £1 billion.

AIM is a stock pickers market which is clear from the consistently strong performance made by AIM portfolio managers in the space. For example, our own Fundamental Asset portfolio has returned 20.7% year-to-date.

Interested in hearing more about AIM as one of the world’s most successful growth markets? Then why not watch our webinar session to hear more: Is AIM heading for a fall… or is its outperformance set to continue. 

Inheritance Tax Receipts

Inheritance tax (IHT) planning is a growing area helped recently by the Chancellor, Rishi Sunak’s, decision to freeze allowances until 2026.

Official figures from HM Revenue & Customs (HMRC) have revealed that IHT receipts for April to August this year were £2.7bn – £0.7bn higher than the same period a year earlier.

There are a few reasons for this. Yes, the IHT nil-rate band has not risen since 2009 and yes, the majority of wealth in the UK is owned by over 60s which is the age bracket where Covid-19 resulted in more deaths than usual. But more significantly, estate values have risen in the last year mainly due to strong investment returns and property value rises. Expect this to rise farther. Inflation and house price rises are expected to continue and with the freeze on allowances more and more people will find themselves with an IHT issue as we move towards 2026.

You can find out more about the benefits of investing in AIM for IHT planning purposes in our free report available 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 17 years, from the link here.

Collective Investment Schemes are commonplace in UK investment management and are the overwhelming choice for UK retail investors for use within their ISA and SIPP tax-wrappers when looking for exposure to UK smaller companies. But are they all that they seem and are they the only choice? Models of directly held equities are often overlooked but investors could be missing out on the added value models bring over collective investment schemes.

UK smaller companies prove themselves to be big outperformers on the global stage

Texas based fund manager Alta Fox, published an analysis of the best performing small-listed companies in the developed world. This was over the five years from 2015-20 and companies were required to have positive revenue growth and earnings before taxation, interest and depreciation for the previous 12 months. This included companies in North America, western Europe and Australia valued at $150m- $10bn, and that had generated a total shareholder return of at least 350% over the five-year period (35% a year compounded). It excluded all companies in the energy, materials and financials sectors.

Of the 104 companies to make the final cut, 55.7% were from Western Europe vs 32.7% from North America. 13.46% of the top performing companies were found on AIM while only 2.88% were on the UK Main Market. 21.15% were on the Nasdaq, with technology overall making up only 34% of the total.

US companies made up 28.8% of the total, with the UK in second place with 15.4%.

You can hear more about the outperformance of AIM from our CPD adviser webinar session: Is AIM heading for a fall… or is its outperformance set to continue?

Key benefits

Model portfolios give you full visibility and knowledge of all holdings, not simply the ‘Top 10’. This means you can see exactly what you are investing in.

Portfolios of shares are priced at the market price of the underlying holdings and most closed ended small/micro-cap funds trade at a discount to net assets (discounts typically widen during market sell-off), some as high as 19%.

The nature of segregated portfolios of shares means individual investors interests are not bundled with those of others. They therefore benefit from greater liquidity, an ability to sell when needed. Open ended funds holding small-cap shares are very hard to manage given the fluid nature of subscriptions and redemptions. During market sell-offs fund managers will be struggling to manage redemptions which will require them to sell holdings, thereby exacerbating share price declines.

Liquidity is an important investment fundamental not to be over looked. The illiquid nature of small cap holdings worsened the return for holders of Woodford’s fund and ultimately enforced its closure.

Low Costs

Direct equity portfolios standard management fee is around 1%, often less for larger accounts. On top of this, portfolios do not charge often sizable performance fees and trading costs, notably on adviser wrap platforms, are extremely low.

The cost of running closed ended funds with a focus on small caps is very high, with the Total Expense Ratio (‘TER’) of those we have seen ranging from 1.34% to as much as 7.50% where a performance fee has been charged.

Stated fund TERs also ignore the impact of trading costs. Venture Capital Trusts with a focus on AIM quoted companies also trade at discount with high TERs and performance fees.

Direct equity portfolios managed on behalf of individual clients can easily acquire positions in smaller companies. Closed-ended small cap funds struggle to pick up positions of size in their target investments.

Direct equity investment via portfolios encourages efficient portfolio structure and the avoidance of over-diversification. Open-ended small cap funds are often over-diversified, holding hundreds of positions. This is often due to the less liquid nature of smaller quoted companies

One popular Investment Trust we have come across has 360 different company holdings, with the top 10 only accounting for 17% of net assets.

And finally…..

UK investors in collective investment schemes (funds/investment trusts/VCTs) holding AIM shares don’t benefit from the tax advantages available to those UK investors having direct holdings in the companies.

You can find out more about the benefits of investing in AIM for IHT planning purposes in our free report available from the link here.

Disadvantages

• The management of capital gains is harder via a segregated portfolio.
• It’s much harder to judge performance
• Segregated portfolios can be prohibitively costly for smaller accounts of less than £40k

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 17 years, from the link here.

According to The Openwork Partnership, one of the UK’s largest networks of financial advisers, there was a 38% spike in demand for advice on Inheritance Tax (IHT) planning in the past year, with more than one in ten clients wanting to discuss it. This demand is set to increase significantly with latest data from HMRC showing IHT receipts for April to July 2021 of £2.1billion, £500million higher than the same period a year earlier. This is good news for the UK government which is looking at ways of paying for a generous furlough scheme and other Covid-19 support measures. It is however bad news for those looking to reduce IHT, as any increase in IHT tax receipts for the government has a knock-on effect of reducing the amount of assets left to loved ones.

In the Spring Budget, the Chancellor of the Exchequer, Rishi Sunak, announced that the Lifetime Pension Allowance (LPA), nil-rate band (NRB) and residential nil-rate band (RNRB) will be frozen until April 2026. This means the LPA will remain at £1.0731m, the NRB at £325,000 and the RNRB at £175,000 during this time.

In practice, more and more people will find themselves with an IHT issue as asset prices rise with inflation, but IHT allowances remain fixed. House prices alone saw a 2.1% month-on-month increase in August, the second biggest gain in 15 years. This is a key factor helping to explain the sudden popularity of IHT planning by clients and the increase in use of IHT efficient investment products.

You can find out more about the benefits of investing in AIM for IHT planning purposes in our free report available from the link here.

The Office for Budget Responsibility (OBR) is predicting that the next two years may see a slight decline in IHT receipts, due to the effects of the pandemic. That said, they expect the changes made in the budget will see the Government collect an extra £450 million pounds in IHT by 2025/26.

To encourage investors to support smaller growth businesses, the government offers a tax relief called Business Relief (BR). Many companies can qualify for this tax relief, including many companies listed on AIM. Once shares in qualifying companies have been owned for a minimum of two years and until the point of death, the shares are free from IHT. Furthermore, since 2013, AIM shares can be held in an ISA which means that investors can enjoy tax free growth and income on any gains made. This means that investors holding BR-qualifying AIM shares within an ISA can create a tax-efficient investment with no Income Tax, Capital Gains Tax or Inheritance Tax.

Want to hear more? Join us at 2pm on Wednesday 15^th September for our upcoming CPD Adviser webinar session- How can AIM help your clients’ Inheritance Tax planning?  

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 17 years, from the link here.

Business Property Relief (BPR) is a valuable tool which can be used to help you reduce your Inheritance Tax bill.

In a nutshell, if you hold a BPR qualifying asset for two years and until death then that asset will be exempt when calculating how much of your estate will be liable to Inheritance Tax on your death.

Unquoted shares in a company fall within the remit of BPR. And crucially, the term “unquoted” has a broad definition which includes companies listed on AIM, the junior market of the London Stock Exchange.

As such, qualifying AIM shares will not count as part of your estate for Inheritance Tax purposes and none will be due on those assets, even if your estate exceeds the threshold at which your heirs would normally have to pay 40% tax.

You can find out more about the benefits of investing in AIM for IHT planning purposes in our free report available from the link here.

One of the golden rules of financial planning is never to “let the tax tail wag the investment dog”. This is true in the case of AIM shares which should not be bought just for the tax break. Although the tax benefits are significant, AIM shares should be bought first and foremost for their investment potential. The good news is that AIM is one of the most successful growth markets in the world. However, it should be considered a high-risk investment.

Interested in hearing more about AIM as one of the world’s most successful growth markets? Then why not watch our webinar session to hear more: Is AIM heading for a fall… or is its outperformance set to continue. 

It is possible for investors to build and manage their own portfolio of AIM investments. However, such an investor will need to be confident in their ability to choose investments wisely, qualify those investments up until the point of their death for BPR qualification, manage their own administration when buying stocks directly and stay on top of any changes to the applicable tax rules.

The alternative is to work with an investment manager specialising in building tax-efficient investment portfolios. AIM shares as part of a well-diversified and professionally managed investment portfolio carefully structured according to your attitude to risk and your financial goals can be a useful way to plan for inheritance tax. AIM shares can also be included in an ISA where investors will benefit further from tax-free income and capital gains on growth.

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 17 years, from the link here.

AIM IHT ISAs can be higher risk, more volatile and less liquid when compared to conventional ISAs. Tax rules can change and benefits depend upon circumstances.

AIM has been the envy of growth markets around the world for some time now. It significantly outperformed London’s main market in all key areas during the Covid-19 crisis and has also significantly outperformed over the past 5 years.

The make-up of AIM has changed considerably since it began back in 1995 when it was considered the wild west of investment markets. Today is a very different picture.

AIM has become a very well-rounded market with many highly profitable, well-established and fast-growing companies. AIM has large exposure to some of the economy’s best performing sectors such as technology and is the marketplace of choice for many exciting new UK growth companies.

But can it last? Are valuations too stretched? Is there a correction around the corner? Could the tax benefit rug be pulled from under its feet? Should you be concerned?

Watch the recording of our session Is AIM heading for a fall… or is its outperformance set to continue?  where we discussed these questions and more.

You can find out more about the benefits of investing in AIM for IHT planning purposes in our free report available from the link here.

Interested in hearing more about how AIM for IHT works? Then why not watch our webinar session named All you need to know about investing in AIM for inheritance Tax where we delve into the subject in more detail.

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 17 years, from the link here.

AIM IHT ISAs can be higher risk, more volatile and less liquid when compared to conventional ISAs. Tax rules can change and benefits depend upon circumstances.

If you are one of those people who have been saving into an ISA throughout your working life, then you are most likely to be in the fortunate position of having grown this investment into a significant asset. Investing into an ISA was a good move as it offers you tax-free growth and income on your savings. So far so good. However, if you are at the stage in life where you ought to be considering your estate for Inheritance Tax (IHT) then you may have an issue.

An ISA can be liable to a 40% claim by the taxman through Inheritance Tax at the time of your death, significantly reducing the value of your estate and the amount of assets that will pass to your loved ones.

What can you do about this?

One proven and simple solution is to transfer your existing ISA into an AIM IHT ISA managed by an experienced investment team. This could allow you to:

• mitigate 100% potential Inheritance Tax if held for two years and on death
• benefit from the leading growth potential offered by AIM as one of the world’s leading growth markets
• continue to benefit from tax-free income and growth within the ISA wrapper
• retain control of your assets- you can make withdrawals if needed

You can find out more about the benefits of investing in AIM for IHT planning purposes in our free report available from the link here.

Interested in hearing more about how AIM for IHT works? Then why not watch our webinar session named All you need to know about investing in AIM for inheritance Tax where we delve into the subject in more detail.

AIM, London’s growth market, has materially outperformed the UK main stock market for a number of years, reflected in the very strong performance of AIM for IHT planning portfolios.

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 17 years, from the link here.

AIM IHT ISAs can be higher risk, more volatile and less liquid when compared to conventional ISAs. Tax rules can change and benefits depend upon circumstances.