This year’s AIM Showcases around the country brought up a number of similar questions for managers, but the top concerns facing the market no longer focus around Brexit.
While most agree that the Brexit uncertainty of the past few years has done nothing to help the AIM market – and the fact that this uncertainty continues is a frustration for the industry – many are looking towards new headwinds beyond 31 October (or whenever it is that the UK does actually leaves the EU).
And one of the big issues that kept coming up among both advisers and managers over the six-event series was the prospect of a Labour government led by Jeremy Corbyn with John McDonnell in Number 11 Downing Street.
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As one manager put it, whether a Corbyn government would remove access to Business Relief for AIM investors is “anyone’s guess” – it does not obviously sit well with his left wing instincts, but at the same time the negative impact on small British businesses would be such that the new government might not want to be viewed as taking this important funding route away in a post-Brexit environment, when supporting small businesses should be at the forefront of their minds.
Indeed, the managers felt that Treasury officials would be likely to educate an incoming government on the benefits to the economy of these investments. They said it bridges an important funding gap and it would be logical for a government to recognise that.
The managers also pointed out that, while Corbyn may be (as one described him) “a bigger risk than Brexit”, this is also an important reason why it’s important to make sure that investors have a good quality portfolio and are not solely focused on the tax reliefs.
Meanwhile, the Q&A discussions during the Showcase events also saw managers quizzed about liquidity, with concerns being raised particularly in the wake of the problems affecting Neil Woodford’s Woodford Equity Income Fund, which has been suspended for several months.
However, the managers sought to reassure advisers across the country, explaining that liquidity has always been an issue that they pay close attention to, describing it as “a core part of the investment process for managers”.
While some admitted that the larger companies on AIM may be becoming “overpriced and illiquid”, they pointed out that there remains a strong pool of potential investments across the index. As one manager described it, AIM is “like the Galapagos” when it comes to different options available for investment, providing plenty of diversity for investors. This is something that was borne out in the AIM Industry Report 2019.
Thanks to all our managers who took part in the AIM Showcase 2019 events: Albert E Sharp; Blankstone Sington; Close Brothers Asset Management; Downing; Guinness Asset Management; Hawksmoor Investment Management; Puma Investments; Psigma Investment Management; Stellar Asset Management; TIME Investments; and Walker Crips Investment Management