DIY InvestorMagazine
/
March2014
24
PICKINGAWINNER
OTHERBENEFITS
A glance at the performance of themost popular picks
shows the tremendous discrepancies that can exist
between the winners and the losers, and the fact that
only Rare EarthMinerals appears on both the top
traded and best performer lists show the difficulty
of stock picking in this market, even for relatively
sophisticated investors.
No-one who backed Rare EarthMinerals will feel short-
changed with a 400% return, but those who conspired
to put Sirius Minerals, Gulf Keystone Petroleum and
Fastjet at the top of the popularity charts will be
feeling a little bruised, sitting on average losses of
almost 57% unless they got their timing spot on.
Over the past five years the FTSE AIMmarket has
returned 122.1% compared with the FTSE All Share’s
performance of 100.9%, but within those figures there
are huge differences between the haves and the have-
nots when compared with themainmarket.
Investors should look beyond the index and short-term
performance when considering AIM shares as it doesn’t
paint the full picture and themarket is volatile at the
extremes.
The prospect of identifying the next Coms, which saw
its shares rise by 950% in the year to Jan 2014, or the
stellar performance of fashion retailer ASOS which would
have returned £211,000 for a £1,000 investment made in
2001, is what makes it attractive to some investors.
However, at the other end of the spectrum, pawnbroker
Albemarle and Bond saw the value of its stock fall from
over to 200p to 17.5p after over-extending itself during
the year.
Admission of AIM stocks in ISAwrappers allows canny
investors to take advantage of tax relief in life as well
as death, as returns on some AIM investments remain
exempt from inheritance tax.
Once certain AIM shares have been held for a two-year
period they qualify for Business Property Relief and
potentially up to a 100% exemption from inheritance
tax even if they were originally held outside of an ISA
then transferred in.
Investors can now choose to purchase individual AIM
shares and hold them inside an ISA or a Self-Invested
Personal Pension (SIPP) or alternatively can access the
AIMmarket through funds and Venture Capital Trusts.
Whilst investors choosing to invest in collectives benefit
from the specialist expertise of the fundmanager and
amore diversified approach, there is no inheritance tax
exemption when AIM shares are held this way.
