AIM Industry Report 2017/18

78 79 GUINNESS AIM EIS AUTHORISED AIM EIS FUND ABOUT GUINNESS ASSET MANAGEMENT Guinness Asset Management was founded in 2003 by Tim Guinness, along with US sister firm Guinness Atkinson Asset Management Inc. The Guinness investment team is recognised as a leader in its field, with a proven investment track record. Guinness prides itself as a long-established business with a strong balance sheet and sound corporate governance. Guinness has been investing in EIS since 2011 and launched the AIM EIS service in 2013 – the team has grown year on year and have had several successful exits to date, returning in excess of the target investment return. The firm manages in excess of £1.1bn, of which approximately £120m is held in EIS and Business Relief qualifying assets. The Fund managers have varied, cross sector experience which is demonstrated by investments made to date within the Guinness EIS and Guinness AIM EIS. GUINNESS AIM EIS The Guinness AIM EIS, launched in 2013, has so far fully invested its 2014, 2015 and 2016 portfolios with 2017 progressing to being fully invested. We close the fund on 6 April each year so that it can be fully invested within that tax year, with the next close due on 6 April 2018. Our favoured AIM investee companies: • Are in established business sectors. • Are profitable or have visibility on profits within a short time period. • Are not reliant on a small customer base. • Have management teams that have been with the businesses for most of their recent history and are not “over compensated”. • Have demonstrable regard for effective corporate governance. • Understand the need to inform and keep in touch with shareholders. The Guinness AIM EIS is sector agnostic and targets investments in at least 10 stocks per portfolio, although historically each portfolio has held 20+ stocks so as to provide diversification. All investments are made within 12 months of the close date with the intent to exit stocks soon after the three year holding period is complete. Guinness holds relationships with AIM advisers and brokers to ensure excellent access to EIS qualifying new share issues. Each stock held must be EIS qualifying (with Advance Assurance from HMRC) – approximately 30% of AIM is eligible for EIS investment. The Guinness AIM EIS is an HMRC approved fund which eases administration when claiming tax reliefs as clients receive one EIS 5 certificate rather than a number of EIS 3 certificates. As we have been encouraged so far in the process of exiting the AIM EIS 2014 portfolio, we will be launching the Guinness ‘Best of AIM’ service in Q1 2018 for existing and new clients looking to benefit from Business Relief planning. DISTRIBUTION OF COMPANIES BY EQUITY MARKET VALUE NUMBER OF COMPANIES MARKET VALUE RANGE £M OVER 1000 500 - 1000 250-500 100-250 50-100 25-50 10-25 5-10 2-5 0-2 0 100 150 200 250 50 SOURCE: AIM JOURNAL AIM STATISTICS, MARCH 2017 OIL & GAS CONSUMER SERVICES BASIC MATERIALS TELECOMUNICATIONS INDUSTRIALS UTILITIES CONSUMER GOODS FINANCIALS HEALTH CARE TECHNOLOGY AIM BY SECTOR (% MARKET CAPITALISATION) 14.7% 16.3% 18.1% 7.1% 11.1% 7.9% 9.9% 12.8% 0.8% 1.3% SOURCE: AIM JOURNAL AIM STATISTICS, MARCH 2017 PSIGMA AIM IHT PORTFOLIO SERVICE ABOUT PSIGMA Psigma Investment Management is a privately-owned discretionary fund manager with an AUM of £2.84bn (as at 31/10/17) providing bespoke portfolio management to private clients, charities, trusts and pension schemes. Our established expertise in multi- asset investing can be accessed through a range of investment solutions, one of which is our AIM IHT Portfolio Service. We are part of the Punter Southall Group (PSG), which was established in 1988 and offers a unique combination of actuarial, pension consultancy, administration and investment services. As part of PSG, we are able to leverage their extensive investment expertise and ensure that we provide the innovative institutional style investment solutions that benefit our clients. OUR AIM IHT PORTFOLIO SERVICE The Psigma AIM IHT Portfolio Service is designed to help individuals obtain tax relief by investing in a diversified portfolio of companies quoted on AIM that qualify for Business Relief (BR). Holding shares in companies that qualify for Business Relief for a minimum of two years will mean that they should be exempt from Inheritance Tax, provided they are still held upon death and that the shares themselves are deemed by HMRC to qualify for Business Relief at that point. Our AIM IHT Portfolio Service team follows a robust investment process to build a portfolio of profitable and well-managed companies that they believe have the potential to generate good returns, as well as qualifying for BR. The team is highly experienced in managing AIM IHT- specific portfolios, while the Psigma AIM Committee has more than 95 years’ collective experience investing in equity markets. Typically, Psigma’s AIM IHT portfolios will comprise of 20-30 holdings, each having been subject to our robust investment process. When selecting companies we incorporate in-depth internal and external research. This helps us to filter the 500 companies on AIM that are potentially BR eligible down to approximately 100-125. Each holding will generally possess the following characteristics: • Profitable, with good revenue and earnings visibility, and strong cash flows. • Strong balance sheets with sensible debt levels for the business model, often with a modest dividend yield. • Sustainable business model with long-term growth prospects. • Experienced management teams. • Appropriate valuations for the business model and earnings profile. In addition to using external analyst research, Psigma’s AIM Committee works closely with Psigma’s UK Equity team, which provides valuable insight into the broader UK corporate ecosystem. Our AIM IHT Portfolio Service team is constantly evaluating new and existing investment opportunities. Meeting company management teams is a crucial part of our investment process. Our AIM IHT Portfolio Service is designed for clients who wish to carry out IHT planning to reduce their Inheritance Tax liabilities. This service provides planning vehicles whilst allowing the client to retain ownership and control over their assets. This service could also appeal to clients with ISA savings who wish to take advantage of the additional tax benefits of holding AIM securities within a tax free wrapper whilst reducing their Inheritance Tax liability. The Psigma AIM IHT Portfolio Service is a high risk investment strategy therefore this service is best suited to clients who are comfortable with higher risk investments. PSIGMA AIM IHT PORTFOLIO PERFORMANCE FTSE AIM ALL-SHARE INDEX TOTAL RETURN FTSE SMALL CAPITALISATION INDEX EX INVESTMENT TRUSTS TOTAL RETURN PSIGMA AIM IHT PORTFOLIO Oct 17 Jul 17 Apr 17 Jan 17 Oct 16 Jul 16 Apr 16 Jan 16 Oct 15 Jul 15 Apr 15 Jan 15 Oct 14 Jul 14 Apr 14 Jan 14 Oct 13 97.52% 46.94% 35.55% 80 100 120 140 160 180 200