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The Fundamentals #7 – 10 reasons to invest with Fundamental Asset Management

In the seventh 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  reasons to invest with Fundamental Asset Management.

If you or your client already invests with us, we hope you don’t mind us reminding you what makes us different.

10 Reasons to invest with Fundamental

1. Same portfolio managers since founding in 2004.

2. Our in-depth research seeks out the best investment opportunities on AIM.

3. Experience and expertise, gained through several stock market cycles, along with our outstanding customer service, makes Fundamental Asset Management one of the most successful AIM managers for tax efficient investing in the UK.

4. Personal service with resources such as market insights and direct contact with our portfolio managers.

5. “Core and Satellite” investing approach provides exposure to larger AIM stocks as well as smaller companies with higher growth potential.

6. Excellent value for our clients; a fully tailored portfolio service.

7. Client retains access – assets remain in client’s own name – so no loss of control and client has freedom to redeem part or all if needed.

8. Significantly outperformed the AIM market since inception in 2004, but monthly returns have exhibited less volatility.

9. Support to estates after a client has passed away. At a difficult time, we provide the information HMRC requires at no additional charge.

10. One of the most competitively priced products in the market providing excellent value.

For more information about reducing Inheritance Tax by using Business Relief (also know as Business Property 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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AIM ‘For Sale’ – private equity spots a bargain

The recent stock market sell-off has resulted in several private equity groups taking a close interest in AIM quoted companies. We aren’t surprised given the quality on offer from AIM’s proven performers, nearly all of which are now trading at significantly lower valuations than they were a few months ago.

At the end of April, Baring Private Equity Asia (‘BPEA’), confirmed that it was in the preliminary stages of considering a possible offer for RWS Holdings, one of AIM’s largest companies, valued at over £1.5 billion.

RWS has not received any formal approach from BPEA, which may never materialise, but we aren’t surprised they have made a move given RWS’ declining share price over recent months and the highly cash generative nature of this world-leading provider of technology-enabled language, content and intellectual property services.

BPEA is required, by not later than the close of business 19 May 2022, to either, announce a firm intention to make an offer, or announce that it does not intend to make an offer. The deadline may be extended with the consent of the Panel on Takeovers and Mergers.

Matters have progressed even further with Ideagen, a provider of compliance software for regulated industries. In the middle of April, private equity group Cinven confirmed that it was in the early stages of considering a possible offer for the Company. While Cinven subsequently pulled out, two other private equity groups, Astorg and Hg, then stepped in.

Hg has now offered to pay up to 350 pence per share, a premium of about 52% to Ideagen’s closing price on April 11, valuing Ideagen at just over £1 billion..

Shares in Ideagen currently site at 352 pence, above Hg’s offer price, suggesting that investors are expecting a counter bid from French rival suitor Astorg.

UK-based Ideagen is a leader in the +$30 billion regulatory and compliance software market, serving highly regulated industries such as life sciences, healthcare, banking and finance and insurance. More than 8,000 customers use Ideagen’s software, including 9 of the top 10 UK accounting firms, all of the top aerospace and defence companies and 75% of leading pharmaceutical firms.

Ideagen’s board plans to unanimously recommend the Hg deal to shareholders, considering that it “represents value for shareholders”.

Since moving to AIM from Plus Markets in July 2012, when its market capitalisation was only £11m, Ideagen has been a strong performer on AIM, acquiring a large number of businesses along the way. Given the recent de-rating of technology stocks, the acquisition multiple of 48x adjusted forecast earnings for the year to April 2022 looks quite full to us, so we aren’t surprised the board are enthusiastic supporters of the deal.

Not only will we be sad to see another high-quality AIM company leave the junior market, but, if share prices of AIM companies continue to languish, we fear that cash-rich private equity buyers will acquire several other AIM companies by the time the year is out.

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 recent Webinar 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

 

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 #5 – How to use AIM to stop HMRC taking money from your family?

In the fifth 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 to use AIM to stop HMRC taking money from your family.

Figures released yesterday by HMRC showed they took £6.1 billion in Inheritance Tax for March – up by £0.7 billion on last year. How can clients use AIM  to reduce the amount their family pays after they pass away?

One way is for a client to invest 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.

What is Business Relief?

Business Property Relief or BPR (now known as Business Relief) was first introduced in 1976 to allow family businesses to be passed down through generations free of IHT. Its scope subsequently widened and since 1996 it was made available for a range of assets, including limited companies. This means if you buy and hold shares in such companies you could potentially pass on those shares IHT free provided that:

  • the shares are held for at least two years and are still held on death
  • the company still qualifies for BPR at the time of the investor’s death

You could buy as few or as many shares as you wish. There is no upper limit or allowance. Provided the above conditions are met, the whole value of the investment – be it £10,000 or £10 million – should attract 100% IHT relief.

Please note, tax benefits depend on circumstances and tax rules can change.

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.

Upcoming webinar: How to use AIM for Inheritance Tax Planning? Your Questions Answered

Join Fundamental Asset Management’s Co-Founders Chris Boxall & Stephen Drabwell on Wednesday 4th May at 3pm 2022 as they answer your questions on using AIM for Inheritance Tax Planning. To register for the webinar click here.

What Would You Like To Know?

Now is the time to ask us and we will endeavour to cover it in the webinar.
Send your questions to: [email protected]

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 #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


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ISA deadline reminder

The ISA deadline for 2021/22 is April 5th, the tax year end. However, the latest date for receipt of ISA applications is 31st March. Please contact us if you would like to discuss opening an AIM IHT ISA.

You have until the deadline to invest this year’s £20,000 savings allowance so as to benefit from no tax on dividends, interest and capital gains.

As we wrote about in our back-to-basics series The Fundamentals #2: How to use ISAs for Inheritance Tax planning; ISAs per se are not Inheritance Tax free, but they can become so by using a service such as the Fundamental Asset Management AIM IHT ISA Portfolio Service.

For more information, click here or watch the video below:

Using ISA and AIM for IHT

ISA DEADLINE & IHT PLANNING REMINDER

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


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The Fundamentals #2: How to use ISAs for Inheritance Tax (IHT) planning?

 

In the second of our new series about going back to the basics of investing in AIM shares for IHT planning purposes, we look at: How to use an AIM ISA to reduce Inheritance Tax.

Are ISAs Inheritance Tax free?

ISAs per se are not Inheritance Tax free, but they can become so by using a service such as the Fundamental Asset Management AIM IHT ISA Portfolio Service.

What is an AIM ISA or AIM IHT ISA portfolio?

An AIM ISA portfolio or AIM IHT ISA portfolio, as the name suggests, is a portfolio of AIM shares, listed on AIM, the junior market of the London Stock Exchange. AIM shares which meet the Business Property Relief rules should benefit from IHT relief and can be held in an ISA. We explain more about Business Property Relief here.

How does it work?

Fundamental Asset Management purchases and manages a portfolio of eligible AIM ISA shares on a client’s behalf – we are experts in assessing Business Property relief eligibility. The portfolio of shares, including capital growth, can be passed on free of IHT after two years, provided the shares are still held on death and still eligible for relief.

Do all AIM shares benefit from IHT relief?

No. At the end of 2021 there were 852 companies on AIM. We estimate that approximately 600 qualify for Inheritance Tax relief and, of those, approximately 300 meet our investing criteria.

When is the ISA deadline for 2021/22?

The ISA deadline for 2021/22 is April 5th, the tax year end. However, the latest date for receipt of ISA applications is 31st March. Please contact us if you would like to discuss opening an AIM IHT ISA.

Can an ISA from a previous year become an AIM IHT ISA?

Yes. You can transfer existing ISAs to Fundamental Asset Management:

  • Protecting your ISA wrapper benefits
  • Gaining Inheritance Tax relief after 2 years
  • Taking advantage of the potential growth AIM offers

For more information see our website page AIM ISA Explained

Is now a good time to invest?

As is normally the case when stock markets face uncertainty, the share prices of smaller companies, and particularly those on AIM, have sold off significantly in the first quarter of 2022.

We believe in focusing on the fundamentals of a company, and recent results and updates from many AIM companies we follow have been extremely positive. The recent sell-off therefore presents an excellent opportunity to consider investing in a host of exciting, growing AIM companies, at far more modest valuations than a few months ago.

  • See our previous blogs for more information. AIM market sell-off – what we are doing.
  • Listen here to a podcast featuring Chris Boxall, Co-founder of Fundamental Asset Management discusses the latest market sell-off and considers what investors should be doing.

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


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Introducing The Fundamentals Series

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


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AIM market sell-off – what we are doing

The week is closing with another big stock market sell-off and, as is once again the case, the shares of smaller companies, particularly those on AIM, are having a tougher time than the blue chips.

Russia’s diabolical invasion of Ukraine has further destabilised a fragile stock market, which was already straining under inflationary and interest rate fears; ironically, in the short term, the risk of the latter has now diminished.

Our previous Blog here shows the stock market reaction to major geopolitical events going back to the Pearl Harbor Attack of 1941.

Mr Market, the manic depressive!

As experienced investors in AIM for Inheritance Tax planning purposes for nearly 20 years, we have unfortunately seen this all before, most recently at the time of the first pandemic lockdown in February 2020 when stock markets fell precipitously, with the AIM market falling 36% in a month. Following this tumultuous and very rapid fall it proceeded to recover strongly, finishing the year up 20% and eclipsing the main UK stock market which remained lower. A similar recovery took place after the financial crisis with the AIM index more than doubling off lows.

Moving forward to the current time, AIM IHT portfolios, in line with the AIM index, are down c20% year-to-date and 25% down from the highs hit at the beginning of September 2021, while the UK main market is down approximately 9.5%.

Selling on AIM has been indiscriminate this week, with even mild disappointment severely punished, and large share price declines for some stocks, as high as 60% in a day in some cases. It should be emphasised that there are rarely stock specific reasons for such dramatic falls, and this is simply the feature of a less liquid market, with plenty of irrational sellers and very few buyers. With a few exceptions, such dramatic share price declines rarely reflect the financial strength or long-term prospects of the companies in question, they are simply a feature of ‘Mr Market’s’ irrational behaviour.

So, what do we do at times like these?

The simple answer is, very little, other than keep an eye out for bargains.

There is certainly no point manically trading, seeking out potential safe havens as they don’t exist, with all small caps being dragged lower, notwithstanding any apparent defensive characteristics. The bid/offer spread also widens and it’s a lot harder to sell at the desired price.

Panic selling, on Mr Market’s terms rather than your own, is always the wrong approach. This incurs unnecessary trading costs and one risks being out of the market when things turn around, as they surely will at some point.

During periods of excessive volatility we recommend clients ignore the manic movements of share prices as they are largely irrelevant, that is unless you need to sell, which we hope is not the case. Think of smaller companies on the stock market as one would an unquoted private equity investment, which does not have the distraction of daily pricing.

Furthermore, as investors in AIM for Inheritance Tax planning purposes, we don’t have the luxury (or disadvantage) of being able to sit in cash and are obliged to remain fully invested, so there is nowhere to hide, even if we wanted to. The advantage of this is that when things do turn around, which they will, portfolios are well placed to benefit, being already invested.

What about valuations?

Companies which joined in AIM in 2021, often with unwarranted valuations, have seen their shares hit particularly hard, with little loyalty being shown by new shareholders. The valuations of many of these were unjustified, often based on unusual market conditions over the pandemic which flattered their growth prospects. Many institutions were naïve to back these at such high valuations and they are now paying the price. The artificial valuations assigned to IPOs, which are priced by brokers and the companies themselves, is a reason why we are reluctant investors at IPO and like to see companies deliver on public markets first.

The valuations of some better-established AIM companies have looked stretched for a while and if growth prospects are determined to be less stellar than originally anticipated (something experienced with one of our stocks this week) share price falls are justified, however, not to the extent that we have seen, as Mr Market’s pessimism becomes excessive.

Conversely, the valuations of some excellent highly profitable companies, with attractive growth prospects, have also been pulled down to extremely attractive levels, offering compelling buying opportunities.

To all-intents and purposes, at times like these, we consider that long-term holders of small cap shares should notionally consider the stock market to be closed, that is unless you are a buyer. With the war only in its first week, the volatility is likely to continue for a while longer.

 

Fundamental Asset Management
www.fundamentalasset.com