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AIM shares? It’s a Wild West to some

The brave can strike gold if they’re ready for risks in the hunt for bounty

By ROSIE MURRAY-WEST, FINANCIAL MAIL ON SUNDAY PUBLISHED: 25 September 2021

It is hard to make your mind up about AIM, the Alternative Investment Market that has nurtured some big names, but also hosted huge failures.

The market had a strong 2020, outperforming the broader UK equity market by 33 per cent, and its record this year has continued to be good…

Harry Nimmo, co-manager of investment trust Standard Life UK Smaller Companies, …says: ‘AIM is the envy of the world in terms of its depth and scale. It is suitable for nurturing companies from the very small to those with market capitalisations in excess of £1 billion…

Where to pan for nuggets of gold 

AIM is a huge market with 830 listed stocks so it can be hard to pick winners…

There are plenty of household names on AIM such as clothing giant Asos, Fever-Tree Drinks and pollster YouGov.

But there are lesser-known winners such as life science company Abcam, language translation specialist RWS and ID verification company GB Group.

Watch out for the risks and pitfalls 

While AIM might have spawned household names, of course it doesn’t follow that every company is a guaranteed success story…

Investment funds to set your sights on 

…While picking individual stocks on AIM can be lucrative, it is hard to negotiate the large number of them on the market. The heightened risk means it is important not to put all your eggs in one basket…

Matthew Read, senior analyst at financial research group QuotedData, agrees. He explains: ‘AIM companies tend to have lower financial reporting requirements.

‘This can create a concern for some investors, but it can be counteracted by focusing on AIM-oriented investment trusts which have a strong focus on ESG (environmental, social and corporate governance) issues.’ He says Montanaro UK Smaller Companies is good in this area.

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