Have you taken the Aim plunge with your Isa?

Since the restrictions keeping Aim shares out of Isas were lifted on 5 August, the most popular stocks have been commodities and resource companies. Amur Minerals Corporation (AMC), Berkeley Mineral Resources (BMR), Gulf Keystone Petroleum (GKP), IGas Energy (IGAS) and Iofina (IOF) are among the most popular. But with such a high concentration of commodity-based stocks taking up such big chunks of people's Isas, experts have raised concerns about a lack of diversification.

But conversely, investor confidence is on the rise. Investors are most optimistic about energy and mining stocks listed on Aim, according to a Halifax survey which showed 51.7 per cent of survey respondents think it is the sector poised to deliver the best returns this year. And around 37.6 per cent reckon financial services Aim shares will beat the pack, while 35 per cent believe basic industries such as chemicals and building materials will take the top spot.

Danny Cox, head of financial planning at Hargreaves Lansdown, warns that Aim shares can be very volatile with a high risk of failure. "They should only be considered by sophisticated investors who are comfortable with the extra risk and have a long-term investment horizon. Investors should only have a small exposure to Aim shares: I suggest no more than 5 per cent of a portfolio."

Investors who already own Aim shares are also selling them and buying them back within their Isas. This is because it is not possible to transfer them directly into an Isa from a normal account, and means the most popular stocks held within Isas aren't all the same as those held outside Isas. However, this will level out in a couple of weeks once all the stocks have been bought back, according to Barclays Stockbrokers.

An inheritance tax planning opportunity?

Despite the surge of interest in Aim, experts believe investors using Aim stocks as an inheritance tax (IHT) planning tool - one of the perks of holding certain Aim shares for two years plus - will be a small minority.

At first, the attraction of holding shares in a tax-mitigating Isa which is inheritance-tax-free on death seems clear.

But Aim shares can be highly risky as they come with less regulation than main-market shares, often poorer liquidity, wide bid-offer spreads and poor dividend yields - and it's not uncommon for companies to de-list.

By contrast, most investors looking for ways to minimise IHT are elderly and risk-averse. And their investment goals tend to be capital protection and income maximisation - neither of which Aim shares are ideal for.

Mr Cox says: "Aim stocks are not usually a good fit for these types of investors and I suspect, were it not for business property relief, most clients would not choose this type of investment. The key issue here is to always consider the investment merits first, and then look at the tax benefits as an added bonus rather than a reason to invest."

Aim funds could be better for your portfolio

You can still get Aim shares in your Isa without investing directly by buying smaller companies funds. Before 5 August this was the only way to include Aim shares in your Isa, but for many people it's still a more sensible idea than taking a punt on individual shares because you get access to a diversified spread of investments.

There are a number of highly regarded actively managed funds with heavy exposure to Aim and they tend to have some smaller FTSE companies in their portfolios as well, which can help their performance.

Marlborough UK Micro Cap Growth Fund (GB00B02TPH60) managed by Giles Hargreave and Guy Feld is a favourite in the space. It's a first-quartile performer over three and five years, but slumps to fourth quartile over one year as it has underperformed its benchmark, Investment Management Association (IMA) Smaller Companies sector. It's 84.7 per cent invested in micro-cap companies, and 11.4 per cent in small companies - with 77.76 per cent in companies listed on Aim.

The CF Miton UK Smaller Companies Fund (GB00B818N094) had around 60 per cent of its assets in Aim as at 1 July 2013 and is run by experienced smaller companies manager Gervais Williams (see our recent interview with him). And Liontrust UK Smaller Companies (GB0007420788), which has a 52.24 per cent weighting to Aim shares, is among the top 10 performing funds in the IMA Smaller Companies sector over three and five years. It has a focus on technology, industrials and financials, and has a reasonable total expense ratio of 1.68 per cent.

10 most popular Aim shares among Barclays Stockbrokers clients

1. Sirius Petroleum: 181% uplift week on week

2. Fastjet PLC: +433%

3. Gulf Keystone: +229%

4. Red Rock Resources: +778%

5. IGAS Energy Plc: +200%

6. Nighthawk Energy: +1088%

7. CIC Capital Ltd: +130%

8. Quindell Portfolio: +283%

9. Phom Corp: +5900%

10. Globo Plc: +285%

10 most popular Aim shares held within Isas among Barclays Stockbrokers clients

1. Gulf Keystone

2. Sirius Petroleum

3. Fastjet PLC

4. IGAS

5. Quindell

6. Globo PLC

7. IQE

8. Blinkx PLC

9. ASOS PLC

10. IOFINA PLC

Top 10 funds with weighting to Aim shares