AIM: Many happy returns!
The AIM market started life in June 1995 and has certainly celebrated its 21st year in spectacular form. In the 12 months to 30 April 2017 the FTSE AIM All Share Index rose 32.4%, massively outperforming the FTSE 100 Index (up 15.4%) and the FTSE 250 Index (up 16.7%). Indeed the (more concentrated) FTSE AIM 100 Index rose by a pretty staggering 40% over the same 12 month period.
Like most 21 year olds, AIM is now wiser, more rounded, more sophisticated, more grown up and altogether a more attractive proposition than it was in its teenage years. As a result of this increasing maturity, boosted by the stellar outperformance AIM has achieved over the last 12 months, it has far broader investor awareness, acceptance and participation (in the UK and overseas) than was the case as recently as a few years ago, when the over preponderance of oil & mining shares meant AIM’s reputation remained overly short term, speculative and prone to disappointment.
OK, the number of companies currently listed on AIM is “only” 973, versus the peak in December 2007 of 1,694. But the current total AIM Market Cap (at £86.8bn) is not a million miles away from the 2007 year end peak of £97.6bn, despite the substantially lower number of companies now on AIM. The companies may be fewer in number, but they’re considerably bigger, and better in quality.
The number of tax breaks / advantages available to AIM listed companies has increased substantially in the last 3-4 years. For several years shares in most AIM listed companies have been free from Inheritance Tax, if held for at least 2 years, and, as such, have played an increasingly important role in private individuals’ estate planning. AIM companies were finally allowed into ISAs from August 2013. The ISA allowance that tax year was £11,520: in the tax year just starting it is 74% higher at £20,000 pa.
The Office for National Statistics, in its paper: Ownership of UK quoted shares, published in Sept 2015, (relating to the end of 2014), stated that over 30% of AIM shares are held by individuals. This high number confirms the increasing all round attractions of AIM to private investors. With various helpful tax changes over the last 4 years giving a nice tail wind, and an increasing number of AIM shares offering high / sustainable / growing yields, we believe that AIM looks in fine fettle as it approaches its 22nd birthday next month.