After many years of campaigning, smaller companies enthusiasts finally got their way last August when they were first allowed to put shares from the junior Alternative Investment Market (Aim) into their Isa. The effect on the market was palpable with volumes surging as investors who had been frustrated for many years were finally allowed to put their favourite junior company shares in a tax efficient place. It is worth noting, too, that a good number of Aim shares are inheritance tax (IHT) exempt if they are held for a significant length of time, currently two years or more.
Those investors who gained exposure to Aim last August should have been amply rewarded if the performance of the wider Aim index, which has risen more than 16 per cent in the past six months, is any indicator. By contrast, the FTSE 100 has risen by 3.5 per cent and the FTSE 250 by 10.2 per cent in the same time period.
Of course, past performance is no guarantee of future success and, due to its nature as a fast-growth smaller companies index, Aim tends to outperform and underperform more dramatically than larger cap indices. Also, the stars have aligned perfectly for Aim in recent months with the influx of Isa money, improving economic conditions in the UK and increased risk appetite among investors. But what this has done is highlight some of the quality on the Aim market and how investors can construct a diversified portfolio to hold for long-term gains.
Below we recommend five top picks from Aim for Isa investors from across the investing spectrum, with five alternatives in each area.
GROWTH
