The Alternative Investment Market (AIM) is a sub-market of the London Stock Exchange, founded in 1995 to allow smaller companies to access the capital markets with less stringent regulatory requirements. Since launch, AIM has helped over 3,600 small and medium sized companies to raise equity to support their growth and currently includes companies operating in more than 100 countries, 40 different sectors and with a combined market capitalisation of over £98 billion (as at May 2020).
June marks the 25th Anniversary of AIM and we asked Senior Investment Manager Andrew Banks, who manages the JM Finn Inheritance Tax (IHT) Portfolio Service for his five key reasons for why investors should consider investing in AIM-listed stocks:
- There are, and have been, some great investment stories in a variety of different industries/ sectors
- Compelling IHT advantages through Business Relief on many (but not all) AIM shares
- Exposure to young, growing companies without the many legacy issues that many large companies are currently facing
- It is still possible to discover hidden gems, as the AIM is under-researched or ignored by many investors and analysts
- AIM shares benefit from an exemption from Stamp Duty on purchase, unlike fully listed shares and are also eligible for ISA investment
Of course it is important to consider the risks of investing in AIM stocks; because the companies tend to be smaller and younger, they are deemed to be high risk investments, and the possibility of losing money is therefore also high. Particular investment risks may include:
- liquidity may be limited, so that it can be difficult or impossible to sell the shares
- there is often a big difference between the price the shares can be sold for and the price they can be purchased for
- the price at which the shares can be sold can change very quickly and may go down as well as up
Talk to your professional adviser or one of our Wealth Planners to determine whether the Inheritance Tax Portfolio Service, and the risks that go with it, are suitable for you.