Investments  

Mixed reaction as Aim reaches 20th birthday

Mixed reaction as Aim reaches 20th birthday

Industry figures have given a mixed assessment of investors’ reactions to the Alternative Investment Market as it reached its 20th anniversary.

Fund managers and other specialists praised the market’s development, although others noted that Aim had suffered from too high a level of volatility, which may have posed a challenge to investors looking for somewhere to put their money.

According to the 33-page Aim factsheet for May 2015, in 1995, the market’s first year, 121 companies listed on Aim, reaching a market value of £2.4bn.

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By 2014 1,104 companies were on Aim, bringing the market value to £71.4bn.

Judith MacKenzie, head of public equity for venture capital trust specialist Downing, described the 20th anniversary as a major milestone, saying: “Aim has confounded its early critics and has delivered a successful growth market to investors and the companies themselves.

“Although as an index it has been volatile, there has been outstanding performance from Information Technology and Industrial subsectors of the Aim All Share.”

Andy Gray, manager of Artemis VCT, said the market had allowed businesses to unlock their potential.

Share price total return on £100 to 31 May 2015

DurationOne yearThree yearsFive years10 years
FTSE Aim All Share96.03115.19117.7889.47

Source: Association of Investment Companies

However, Aim has also come in for criticism over the poor quality of some earlier entrants, although many noted that the situation had improved.

Douglas Lawson, director at Amati Global Investors, said: “The Aim market has a chequered history. There is little doubt that many companies have been admitted that should never have come near the market, especially prior to 2008.

“The quality of the market has improved as it has matured, albeit some problem areas remain.”

Paul Mumford, manager of the Cavendish Aim fund, agreed, saying that while the initial surge onto Aim had involved some companies that may have been unsuitable, many of these had left following the banking crash and recession. Harry Nimmo, manager at Standard Life UK Smaller Companies, said the market was better balanced than before in terms of sector exposure, but still offered growth and development opportunities.

However, investing in the market could be lucrative for those willing to carry out research, according to Laura Foll, deputy fund manager for Lowland Investment Company. She said: “Given many managers’ desire for liquidity, the area often gets overlooked and this presents an opportunity for those willing to do the work.”

Adviser view

Dan Farrow, director of Essex-based SBN Wealth Management, said: “Aim has been a success, but it would be interesting to see the default rate of the companies involved.”

Email: david.baxter@ft.com