Isa savers have begun to shun Alternative Investment Market shares over the two years they have been able to invest, according to statistics from The Share Centre.
While up to a quarter of their Isa clients have opted to move their money into Aim since the government made it possible in August 2013, over the past year they have seen the overall number of account holders fall from 30 per cent in the introductory year to 20 per cent in 2015.
Helal Miah, investment research analyst, explained that the 10 per cent decrease year-on-year is not surprising, due to high investor appetite and excitement surrounding the launch.
“Companies listed on the Aim market tend to be geared towards the oil and gas and commodities sectors due to their higher risk. Investors will know that such industries have suffered significantly over the last year, which may also explain the decrease in investment.
“Although investments have marginally decreased, AIM shares often offer investors strong growth potential and the change in regulations has demonstrated that there is consumer interest in the smaller market cap companies.”
Laith Khalaf, senior analyst at Hargreaves Lansdown, told FTAdviser that allowing Aim stocks into Isas has boosted their popularity, with a marked increase in the proportion of clients investing since the rules changed.
“Investors picking Aim stocks need to make sure they are doing so as part of a well-diversified portfolio and that they are fully researching the companies they are investing in,” he added.
Two years ago there was mixed sentiment about the move, with most welcoming the possibilities but highlighting the potential risks.
The head of the corporate finance division at accountancy firm Crowe Clark Whitehill noted that the volatility of some Aim shares would make investors reluctant to hold these investments in Isas, as no relief will be available for capital losses, while then independent policy consultant Ros Altmann said the move could pump much-needed money into smaller companies.
Figures this time last year from Halifax Share Dealing showed that during the first year 19 per cent of trades were placed in Aim stocks.
peter.walker@ft.com
