Next year, the AIM market will celebrate twenty years of operation.
In 2014, 75 new companies joined AIM with an average size of £90m. The average size of company coming to the market is 70 per cent higher than the average over the last ten years and a third more than the highest average in 2007 according to the London Stock Exchange.
In November 2014, the number of AIM quoted companies hit 1,100 for the first time since 2011 although this is way behind the peak of 1,700 in 2006. The new monies raised on AIM in 2014 amounted to £2.3bn compared to £1.2bn in 2013 and £0.7bn in 2012.
This activity comes in spite of AIM’s underperformance (down 18 per cent) relative to the Top UK 350 Companies (down 0.5 per cent) in 2014 using total return figures.
CAM monitors the larger constituents of the AIM market in order to take advantage of investment opportunities for clients as appropriate. Many investments in AIM shares are exempt from Inheritance Tax but, as ever, CAM wishes to avoid ‘the tax tail wagging the investment dog’.
AIM has a lower barrier to entry than the main market and is, in our view, higher risk. However, CAM does see the trend towards larger and more mature businesses as positive and therefore supporting the case for allocating a small percentage of portfolios to AIM stocks for certain clients.
LSE statistics for the 11 months to 30 November 2014:
| 2014 | 2013 | |
|---|---|---|
| New Issues | ||
| UK Main Market, PSM & SFM | 68 | 43 |
| UK AIM (incl transfers & re-listings) | 101 | 86 |
| Company Numbers | ||
| UK Main Market, PSM & SFM | 1,349 | 1,359 |
| UK AIM (incl transfers & re-listings) | 1,099 | 1,094 |
| Market capitalisation (£bn) | ||
| UK Main Market, PSM & SFM | 2,265 | 2,224 |
| UK AIM (incl transfers & re-listings) | 72 | 73 |
| Money raised (£bn) | ||
| UK New | 14.8 | 11.2 |
| UK Further | 15.9 | 14.4 |
Risk warnings
This document has been prepared based on our understanding of current UK law and HM Revenue and Customs practice, both of which may be the subject of change in the future. The opinions expressed herein are those of Cantab Asset Management Ltd and should not be construed as investment advice. Cantab Asset Management Ltd is authorised and regulated by the Financial Conduct Authority. As with all equity-based and bond-based investments, the value and the income therefrom can fall as well as rise and you may not get back all the money that you invested. The value of overseas securities will be influenced by the exchange rate used to convert these to sterling. Investments in stocks and shares should therefore be viewed as a medium to long-term investment. Past performance is not a guide to the future. It is important to note that in selecting ESG investments, a screening out process has taken place which eliminates many investments potentially providing good financial returns. By reducing the universe of possible investments, the investment performance of ESG portfolios might be less than that potentially produced by selecting from the larger unscreened universe.
