Investing in AIM stocks
London’s AIM has gathered a reputation as the wild west of the stock market in some quarters, but it is worth serious consideration by sophisticated share investors, who do their research on individual stocks. Chris Boxall of Fundamental Asset Management explains why.
The Alternative Investment Market (AIM) market is gaining a reputation as a good place for stock pickers. It was set up in 1995 for small companies that needed to raise money as a lower cost alternative to the main market.
At its height it had as many as 1700 companies listed, but over time this has been whittled down to just below 1000. It’s mainly made up of smaller businesses, but also contains venture-backed companies and ten businesses that are now worth over £1 billion each.
Boxall says AIM delivers outperformers in a number of areas if you are prepared to ‘do the work’ and undertake your research. Despite those AIM giants worth over £1 billion, including online fashion retailers ASOS, Boohoo.com and drinks-maker Fevertree, the ‘sweet-spot’ of AIM remains the £10 million to £150 million market cap businesses that can provide investors with ‘great opportunities'.
While the AIM market can provide investment benefits through an ISA tax wrapper as well as relief from capital gains tax, it is in the field of inheritance tax that the real advantages can be found, Boxall says. While the AIM market warns that available tax reliefs should not be the principle reason for investment, as long as you do not touch the speculative ends of the market, it can provide great opportunities.