The nature of investing in AIM for Inheritance Tax planning purposes is that investors must directly hold shares in the underlying AIM companies, albeit via a broker’s nominee arrangement. The Inheritance Tax planning benefits would be lost should investment be made via a fund or investment trust arrangement where the investor simply holds shares or units in the underlying fund or investment trust.
This method of direct investment has the advantage that the investor has full knowledge of exactly which stocks he or she is holding and how each is performing. This contrasts with the typical fund arrangement where normally only the largest holdings (typically the top ten) are disclosed by the fund manager.
The portfolio approach means investors are also privy to all the transaction details and therefore have full knowledge of the manager’s actions.
The suspension of the Woodford Equity Income fund, where 300,000 investors have been prevented from accessing their cash since June, has highlighted the problems with investment in open ended funds, where fund managers, administrators, custodian’s and regulators sit between investors and their money. Furthermore, investors have little knowledge of managers trading activity and the complete picture of where performance is really coming from. Indeed, the opaque nature of fund investment appears at odds with the information age in which we live and the demand for greater transparency.
While a portfolio approach is a requirement for investment in AIM for Inheritance Tax planning purposes it can equally apply to general investment portfolios. Fundamental Asset Management’s general investment portfolios, supported by our in-depth research and a good dose of common sense, have delivered excellent performance over the past few years, benefitting from exposure to some terrific companies, both in the UK and overseas. Our clients have enjoyed success with the likes of Apple, Games Workshop, Microsoft and Nestle, to name a few.
With trading costs a fraction of what they used to be and portfolios free of the additional burden of administrators fees and other excessive costs carried by funds, it’s a great time for portfolio investors.
We would argue that it’s also far more enjoyable and reassuring to have full knowledge of one’s investments and to experience the thrill of some terrific stock selections and of course the disappointment of the occasional mistake!
To find out more about our high performing portfolios call Chris or Stephen on 01923 713890