Are your AIM Portfolios overpriced?
Since the introduction of AIM stocks being permitted to be held in ISAs in August 2014 and the dawning realisation that clients can now have an ISA that cannot only benefit from tax free income and growth but could also benefit from 100% relief from Inheritance Tax, a lot of companies have started to offer AIM portfolios and money has been piling into the AIM market.
Unfortunately, the problem is: most of these companies are buying the same 20–30 stocks which has meant that the price of these “in demand” stocks have had their price artificially increased. Great for those clients who invested early, as they have seen a huge growth in the value of their portfolios over and above what would be normal for this type of portfolio.
HOWEVER: the question is will this bubble burst and if so, when? In short Blackfinch have no idea! One could argue that if money keeps going into these same stocks that the price could just keep increasing and the bubble will never burst… but not many want to take this chance with all their clients’ profits!
So, what’s the solution? Well it could be to diversify (some or all) into another AIM portfolio. Consolidate those profits already made and spread the risk amongst many other companies which are not overpriced and still offer good value for money. If you choose to look at this route, do ask to see the whole list of companies that the new manager will be investing into, so you can compare to their existing portfolio. As mentioned earlier, many managers are using the same stocks and changing the name at the top of a statement does not mean diversification if they end up with all the same stocks again!
WHAT DO WE OFFER AT BLACKFINCH?
Due to the feedback Blackfinch received from advisers saying they were worried about the lack of diversification in the market, a partnership with smaller market cap company specialists, Chelverton Asset Management, who have a proven track record of AIM investment was formed.
Chelverton Asset Management search across the AIM market and only pick those companies with excellent management teams, niche products or services, good cashflow and a widespread of contracts. More importantly, they still offer good value for money knowing that Blackfinch’s clients would not be paying for artificially increased share prices. By doing this, when compared to others in the market, Blackfinch truly offer excellent diversification as there is very little overlap in the portfolios.
The Adapt AIM Portfolios require a minimum of £15,000 investment and ISA transfers can be made directly or via Standard Life and Transact Platforms.
If you would like to find out further information about the range of Adapt AIM Portfolios, please contact:
01684 571 255
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