AIM Industry Report 2017/18

76 77 BLACKFINCH AIM IHT DISCRETIONARY PORTFOLIO SERVICE ABOUT BLACKFINCH Blackfinch Investments Ltd. has been operating in the tax-efficient investment market for over 25 years, providing products with a focus on capital protection, security and growth. Our group has built significant experience and expertise throughout this time and now has approximately £500 million under management and administration. We are committed to delivering sensible investment strategies that target growth and tax efficiency. Our aim is to deliver services and solutions which offer value to investors and generate attractive returns. Our philosophy is based on providing transparency, competitive costs and charges, and making the investment process as simple as possible for our customers. As well as the Adapt AIM Portfolios, we also offer other discretionary managed portfolios, including: Adapt IHT Portfolios, Adapt IHT Protected Portfolio, Evolve Asset Focused EIS Portfolios, Evolve Media EIS Portfolios and our bespoke Thrive Corporate Management Service. OUR AIM SERVICE Adapt AIM Portfolios represent a discretionary portfolio service with the potential benefit of inheritance tax (IHT) mitigation within two years. This is achieved through investment in a portfolio of shares that qualify for Business Relief. To ensure that investee companies qualify, the portfolios undergo regular reviews by a leading tax accountant for full compliance with HMRC regulations. Adapt AIM Portfolios combine the proven expertise of two established and leading investment firms: tax-efficient investment specialists Blackfinch and AIM investment specialists Chelverton Asset Management. The partnership has been created exclusively for this service. Cheverton’s AIM expertise in smaller company investments makes it an ideal partner for building portfolios offering a high level of diversification. Chelverton selects AIM companies according to highly specific criteria. It follows a proven and rigorous investment process, including quantitative screening, to identify companies with attractive cash generation, high and sustainable margins, good growth prospects and solid balance sheets. Blackfinch then focuses its expertise on the portfolios’ investment objectives of capital preservation and tax efficiency whilst also targeting strong returns. Investors can choose from Income and Growth portfolios, which differ in the selection of underlying investee companies and the treatment of dividends received. Both options provide flexibility and control with the ability to access funds as tax or personal circumstances change. A further benefit is that the AIM-quoted shares can be held in an ISA wrapper, meaning they can not only mitigate an IHT liability after two years, but can also offer tax-free dividends with no Capital Gains Tax on investment growth. Blackfinch is trusted with approximately £0.5 billion in assets under management in total, including £5.8 million (30/09/17) invested in AIM through the AIM Portfolios. As a leader in tax-efficient investments, Blackfinch continues to deliver value for customers through its expertise, quality service and transparent approach. £0-£100 £100-£250 £250-£500 £500+ 80 30 70 20 60 10 50 0 40 ADAPT AIM PORTFOLIOS BY AVERAGE MARKET VALUE ADAPT AIM INCOME ADAPT AIM GROWTH AIM ALL-SHARE To this end, each segregated client portfolio holds between 25 and 35 AIM (or NEX) quoted companies, well spread across a range of sectors. The managers, Sam Barton and Stephen Wood, who have worked together on the service since 2008, take a value- based approach to AIM investment. They work with over 55 experienced investment professionals, including 7 sector specialist equity analysts. At the heart of the team’s process is the use of discounted cash flow models based on conservative growth estimates, which help guide investment decisions. The team uses a high discount rate to give a good margin of safety and reflect the inherent risks of smaller company investment. Conducting in excess of 300 executive management meetings with AIM companies each year, the team seeks out businesses with robust balance sheets, long trading histories, which are market leaders and have strong management teams. This conservative approach has, on a relative basis, seen the service protect capital in falling markets. It has outperformed the Numis Alternative Markets Index in 5 out of the last 6 calendar years and over 3, 5, 10 and 15 years on a cumulative basis. Please note that, due to the higher risks involved with these investments, CITS is only available through a qualified financial adviser. CLOSE BROTHERS INHERITANCE TAX SERVICE ABOUT CLOSE BROTHERS Close Brothers Asset Management (CBAM) focuses on providing investment management to a broad range of principally UK investors. We provide a full range of investment management services to individuals and families, advisers and intermediaries representing investors, and private business owners as well as charities and institutions. Our overriding aim is to deliver what we agreed at the outset for investors, through a combination of institutional style investment management and a personal and comprehensive approach to service. We are part of the Close Brothers Group plc, a leading UK merchant banking group providing lending, deposit taking, investment management services, and securities trading. Established in 1878, we believe our traditional merchant banking values, based on service and integrity, continue to be relevant today. OUR AIM SERVICE The Close Inheritance Tax Service (CITS) has been operating since March 2001, making it the longest-running AIM-based IHT service on the market. The service has managed over 2,000 portfolios for clients since its launch, focusing on delivering strong risk-adjusted returns and excellent client service. The main investment objectives of the service are: to achieve the correct tax status by capitalising on Business Relief (BR); to preserve invested capital and achieve growth over the long term within the context of BR (please note that this is not a capital protection service); and to provide diversification from company, sector and geographic risk, where possible. PORTFOLIO CHARACTERISTICS AVERAGE MONTHLY RETURNS SINCE CITS LAUNCH MONTHLY MARKET RETURN -12% -4% 4% -10% -2% 6% -8% 0% 8% 23 of 19 months 61 of 199 months 94 of 199 months 21 of 199 months <-5% >=-5% and <0% >5% -6% 2% CITS* NUMIS ALTERNATIVE MARKET TR # *All data as at 31 October 2017. Past performance is not a reliable indicator of future results. CITS Launched on 28 March 2001. Performance figures for the Close Inheritance Tax Service are stated after annual management and dealing fees, but do not reflect the effect of any initial or administration fees. A reference client for each series is used as a proxy for that series and the figures above show the simple average return over all series active in the period under review. The performance of a reference client is only included in the above analysis if that client had been active for at least six months of each period reviewed. SOURCE: # NUMIS SECURITIES AND * CLOSE BROTHERS ASSET MANAGEMENT AS AT 31 OCTOBER 2017 – BOTH USE MID MARKET PRICES AND ARE SHOWN AS TOTAL RETURN (TR). >=0% and <5%