News

AIM Strong

by Eric Bright
11/08/2017
AIM Strong

Reyker’s AIM portfolio has had a very good year so far. The discretionary-managed portfolio produced an after-fee return of 21.61% up to the end of July this year. Performance of this portfolio beats that of the FTSE AIM All Share index, which has risen 17.45%.

Many AIM firms pin their future growth strategy heavily on technologies and business models which have no demonstrated track record in generating revenues. Often the share prices of these firms are “priced to perfection”, and they are heavily punished if their results disappoint and/or management fails to deliver the strategy.

As the outlook of the UK economy becomes more uncertain, it is vitally important to focus on growth companies that are more likely to generate good cash flow. Cash is the biggest priority for growing businesses as it allows them to do exactly that: grow. Over the course of the last twelve months, we have shifted our portfolio allocation to firms with business models that have some demonstrated successes, and will benefit 2from opportunities and trends looking ahead. This change in our stock selection framework has helped deliver the strong performance so far this year.

We have also adopted an unusual approach in allocating equal weights to stocks in our AIM model portfolios. Typically, investment managers will vary their investment into each stock depending on its characteristics. However, research has shown that such an allocation may be suboptimal when it comes to long term returns of a portfolio, especially when portfolio volatility is taken into account.

In addition to growth, we select AIM companies that will benefit from “business property relief” or BPR. This means if investors have held these companies for two years or longer, they will benefit from inheritance tax relief. It is important to remember that AIM shares can be held in an ISA, making them a very tax-efficient investment.

The minimum size for investment in the Reyker AIM portfolio is £30,000. Our investment team is more than happy to discuss anything further with you regarding this service. Please contact us on 020 397 2597, or drop us an email at investments@reyker.com.

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