AIM

AIM Portfolio Target

Our specialist Alternative Investment Market Managed Portfolio has the aim of delivering a higher return over longer periods, with the added benefit of reducing a client’s future estate assessable for Inheritance Tax on death. This portfolio is suitable for those client’s with a higher than average attitude to investment risk or those who simply wish to try to mitigate a future 40% IHT bill..

Performance to Date

  • Growth to our AIM managed portfolio has now added 113% to the original capital invested.
  • Every £100 invested originally is now worth £213.

Commentary

Investing solely in smaller shares on the Alternative Investment Market must carry the risk of higher volatility. In addition concentration risk is significant as AIM shares tend to be spread across less sectors and by definition must all be UK listed companies. We remain committed to our ambitious long term target, but consistently keeping that pace is unlikely. Growth will always be in fits and starts, dependent upon long term economic cycles. It is inevitable that there will be some years when we drop behind our target. The Great Financial Crisis of 2008/9 obviously took values lower, but they have since recovered. Over the last 5 years markets have been affected by Brexit and of course Covid-19. It has been a tough 5 years to be an investment manager in such a limited market.

What’s the worst that could happen?

To answer this question about the future, there is no better place to start than by looking to the past. The performance chart above depicts what has actually occurred in a real portfolio since inception to date. The performance stated is after all management costs have been deducted. It is a true representation of the growth achieved by a client. If you can accept the level of regular set-backs that occur within this portfolio, then it could be suitable for you. We make this projection at the end of each calendar year and was last updated 01/01/2021. It is an annual graphical depiction of the probability of the following years return. We use a technique known as Standard Deviation to measure the spread of returns. Statistically* it is correct.
  • The middle Dark Green bar is an average continuation of the annual performance achieved over the last 5 calendar years, which has been 13.08% net of all charges.
  • If past performance were exactly a guide to the future then we should end the year exactly with the additional of this level of projected growth
  • However as the FCA insist, past performance isn’t necessarily a guide to the future.
  • Most of the time, about 2 years out of every 3, future annual performance should lie somewhere between the mid green bar of 30.25% and the amber bar of -4.09%.
  • We can state with 68.2% confidence that the return next year should lie somewhere between the extremes of these bars.
  • Almost all of the time, 19 years out of every 20 years, annual performance will lie between the limits of the upper pale green bar 47.43% and the lowest red bar -21.27%.
  • We can state with 95.4% confidence that the future value should be somewhere between the extremes of these bars.
  • That still leaves the unlikely event that a 1 year return could come along once every investing lifetime. Once in 43 years the return could be higher than 47.43% or lower than -21.27%.
  • Any potential investor needs to assess how these tiny, but possible outcomes, could affect their future financial plans

What’s My Bottom Line?

There is no bottom line. But in simple terms we believe you could invest your savings into this portfolio if you can withstand a potential 1 year loss of up to -21.27%. Annual losses will occur some of the years. We always expect that an investor remains invested for at least 5 years and obviously to retain the benefits of investing in an AIM portfolio the investment needs to be held for life.
  • If this projected level of losses is unacceptable, then our Adventurous Portfolio could be more suitable.
  • If you have no requirement to mitigate Inheritance Tax in the short to medium term our Go For Growth Portfolio could be more suitable.

Would this Managed Portfolio be suitable for me?

Suitability depends upon many factors

  • Your attitude to investment risk
  • Your level of investment knowledge
  • Your level of investment experience
  • The term of this investment
  • Your ability to take temporary drops both in overall value and the income generated

Assessing suitability is more of an art than a science. Just a questionnaire and a fancy spreadsheet alone just doesn’t cut it.

Our attitude to risk is the sum of our personal experiences, built over our lifetimes. It can fluctuate by the day, depending on the recent ratio of good to bad news, but deviates little from an individuals base level of acceptable risk.

I believe for many individuals, it’s the sudden market falls that can break our resolve. I don’t tend to receive calls from clients that are getting frightened because their personal level of life savings is remaining static or rising strongly. (Although a strongly rising market is usually a worry for me).

I do now need to add an important Financial Conduct Authority risk warning or two here.

Past performance is no guide to the future
The value of investments can rise as well as fall

Is that the end of it then?

No. A suitable managed portfolio choice has to take a couple of other considerations into account. We maybe know the level of investment risk that you are willing to take. But we now need to consider;

  • The level of risk you need to take.
  • The level of risk you can afford to take

How much risk do I need to take?

That depends on how much money you currently have and how much living you have left in you. If you cannot see yourself spending your current life savings in your lifetime, you have the opportunity to take less investment risk. If you would like the future to be jam-packed with great adventures, then your savings probably need to work harder.

How much risk can I afford to take?

This is a very important consideration. What’s your Plan B if the level of your investments has fallen dramatically? Do bills still need to be paid? Or are all your essentials covered by other means and future withdrawals from this capital are just for the nice things in life? Nice things that can wait until markets recover?

We can help you assess how much short term accessible capital you could need if investment values fall and remain there for several years.

Can I change my mind?

Of course. You can switch between our managed portfolios. Often individuals have savings in several different managed portfolios at the same time.

What comes next?

Pick your managed portfolios and we will do the rest.