Advisers drawn to IHT benefit of AIM investments

More than half of advisers (54%) would cite the Inheritance Tax (IHT) benefit that Alternative Investment Market (AIM) investments can offer as one of the most important factors in their investment, new research has revealed.

Overall, 82% of advisers are expecting more clients to invest in AIM companies during this year’s ISA season compared to last year.

A study among advisers and wealth managers conducted by estate planning specialist, TIME Investments, revealed the most important factors advisers look for when recommending AIM investments to their clients.

TIME Investments suggested the appeal of AIM doesn’t just lie in its “ability to generate attractive investment returns”, but said some companies listed on AIM also qualify for business relief, which can offer IHT relief to investors.

While over half of advisers cited the IHT benefit as one of the most important factors in their investment, the study also found that just 4% said an IHT benefit was not important when making their recommendation.

The research, which was based on responses from 50 UK-based professional financial advisers and wealth managers, found that the lowest scoring factor advisers are considering is long-term growth. Only 44% of advisers cited this as one of the most important factors when recommending an AIM investment, while 8% of advisers said this was not an important factor at all.

Fifty per cent of advisers look for AIM managers that invest in larger and more established companies, the research also showed, while 48% look for portfolios with diversification to reduce specific company and sector risks. Another 48% of advisers indicated they also look for the inclusion of profitable, dividend paying companies.

TIME Investments business development director, Sam Jermy, commented: “Investors looking for tax-efficient growth are increasingly considering investing in AIM companies.

“Investors could create their own portfolio of AIM listed shares or they could choose to invest with a fund manager with professional expertise investing in AIM.

“Not all AIM shares qualify for business relief, therefore investors seeking IHT relief would be wise to focus on managers with specific experience in these types of investments and a long track record of achieving business relief for investors.”

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