AIM's 2020 Bonanza

The FTSE AIM 100 Index total return was 20.6% over last year, massively outperforming the FTSE 100, which produced a negative total return of 11.5%. This must be the biggest one-year differential in AIM’s 26-year history.

As individuals own 25.1% of AIM companies, against just 11.3% of FTSE 100 companies (source: “Ownership of UK shares, UK Government, January 2020”), and with various tax changes (successfully) encouraging individual ownership of AIM shares over the past decade, UK private investors will have benefited very nicely from this outperformance.

AIM also ended 2020 with a record total market cap, at over £131 bn.This was despite having just 819 listed companies at year end, less than half the number of companies listed on AIM at the end of 2007 (1,694 companies). The number has shrunk significantly over the last dozen years, but the quality, maturity & average size in 2020 was materially higher.

After last year it is a brave person who predicts how 2021 will pan out. But this week’s announcement of a third UK lockdown, quite possibly lasting until Easter, with similar measures in place around (most of) the world, means that many of the factors which were in play in the UK, and indeed globally, for the last 9 months will continue for a while longer yet.

The advantage, both in the short term and looking beyond Covid-19, remains with entrepreneurial, fast moving (and fast growing) companies, many of which are listed on AIM.

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