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The Alternative Investment Market (AIM) no doubt has its sceptics. The perception of roller coaster volatility can sometimes put off would-be investors. However, the reality is somewhat different. As well as providing strong growth prospects, AIM stocks provide notable tax efficient benefits for investors.

Below are some of the reasons why you should consider AIM investment for your clients.  

AIM outperforms main market

Despite a dip in 2014, AIM investments have performed well in comparison with its larger counterparts.

The AIM 100 has displayed strong performance over the past few years. To the end of June 2018, the five-year annualised total return p/a for the AIM 100 was 13.9%, versus 8.2% for the FTSE 100.

The high growth potential of AIM shares is further solidified by their tax efficiency. Since 2013, investors have been able to hold AIM investments within a stocks and shares ISA, allowing for tax free investment gains.

IHT mitigation

Many AIM quoted companies qualify for Business Relief (BR). If these shares are held for two years and until death, they can qualify for full IHT mitigation.

Research suggests that up to a third of all money invested in AIM is from IHT planning services, with 48% of current BR offers being AIM based.

An AIM oriented estate planning solution can be very attractive for clients who simultaneously want to achieve growth and protect their assets from the 40% rate of IHT.

Estate planning is likely to be a top priority for clients, and IHT receipts are soaring. The government’s IHT receipts reached a record £5.2bn in 2017/18, and are projected to reach £6bn by 2021-22.

Lower volatility than you might think

AIM investments have long been associated with high levels of volatility. However, market movements are less drastic than you might think. Five-year volatility to the end of June was 11.7%, which is only marginally higher than the 10.2% for the FTSE 100.   

Not limited to small companies

Some of the top companies on AIM, including ASOS and Fever Tree, are worth billions. In fact, eight AIM stocks are now worth £1bn or more.

The average market cap of AIM companies in 2017 was £100m, and the average funding raised by an IPO on AIM in 2017 was £50m.   

However, AIM isn’t purely concentrated on stocks that have a larger market cap. In fact the AIM 100 is actually less concentrated than the FTSE 100. The top 10 AIM stocks’ weighting is currently 36.9%, compared to an equivalent top 10 weighting of 44.2% for the FTSE 100.

An active management focus

The AIM index is more difficult to replicate than the FTSE 100, which has numerous tracker funds available. There are no passive options or ETFs for AIM, so the quality of the investment manager becomes paramount in this regard.

Meet 6 AIM managers in one morning

So that you can meet leading investment managers in this space, Intelligent Partnership is hosting a collection of six AIM Showcases across the UK. You can book your free place here.

There will be six of the largest AIM investment managers in the market showcasing their propositions, with a unique opportunity to network with investment providers face to face.

Our AIM Showcases give you a great opportunity to hear investment providers talk about their solutions, whilst comparing key investment information such as charges and levels of risk and return.

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