Blankstone Sington IHT AIM ISA
Blankstone Sington’s IHT portfolio is unlike those offered by the larger AIM IHT providers. The objective is broadly the same: to invest in BPR qualifying stocks, but Blankstone Sington takes a different approach. The average company size is much smaller and there is a greater emphasis on value investing.
The track record of the portfolio to date is excellent although please remember past performance is not a guide to the future. The portfolio also benefits from a highly competitive fee structure. For larger investments, the annual charge on part of the portfolio can be as little as 0.5%.
We believe the Blankstone Sington offer is an interesting option for wealthy or sophisticated investors wishing to target the smaller end of the AIM market. It might also appeal to those with a large IHT portfolio who would like some diversification. This might be achieved by holding this portfolio alongside others that invest in larger AIM companies, such as Octopus or Unicorn.
- Focuses on the smaller end of the AIM market where the managers see value
- Anticipated yield of 1.5%–3% (not guaranteed) which can be used to pay charges
- No initial charge
- Tiered annual fee structure: pay as little as 0.5% on larger investments
- Differentiated offering in the sector
- Experienced investment manager with over thirty years in smaller companies investing
- Minimum investment £50,000 for new investors (requires transfer from an existing ISA, as this is more than the annual ISA allowance)
- Minimum investment for top ups (existing investors only) £20,000
- Also available outside an ISA
- You can apply online
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Based in Liverpool, Blankstone Sington is predominantly a stockbroker and investment manager.
Liverpool may not scream financial services but it is a pioneering city in the UK’s financial markets. The Liverpool Stock Exchange dates back to 1836 and Blankstone Sington’s offices are just around the corner from the its original building. The business was founded in 1976 by former Liverpool Stock Exchange Chairman, Michael Blankstone, and his business partner, Reggie Sington.
Stephen English is the lead manager on the Inheritance Tax Service and has run the portfolio since its inception in 2010. He is a Chartered Financial Analyst. Mr English is supported by Phil Kirwan who is Portfolio Manager.
Blankstone Sington employs 11 investment professionals. It believes a small, close-knit team enables a nimbler, higher-conviction investment approach.
Watch a video interview with manager Stephen English:
Blankstone Sington has been investing in smaller companies for over three decades. The team believes AIM-listed companies offer a unique opportunity for value investors as the market is under-researched and under-owned by the wider investment industry. This can create pricing anomalies that can be exploited. The team believes there is an investment sweet spot in firms with a market cap of £150 million and under.
That suits Blankstone Sington’s strategy of investing in undervalued businesses or companies offering growth at a fair price. They fit Blankstone Sington’s mandate of preserving investors’ capital, whilst trying to avoid the more speculative and volatile companies on AIM. By investing with a focus on value it also hopes to limit risk. It’s a simple theory: if you pay a low or fair price any falls should not be as great as they would be if you overpay or buy at a premium.
Investments must exhibit certain attributes. Broadly speaking, the lead manager Stephen English, looks for companies with the right valuation, strong cash generation and cashflow, a solid history of dividends and management with a proven track record. The portfolio typically invests in companies which are founder led, where management have a stake in the business.
Source: Blankstone Sington. Past performance is not a guide to the future. Dividends are not guaranteed. Chart shows cumulative performance to 30 April 2019. Based on a weighted average. The performance of individual discretionary managed portfolios may vary.
Investors can expect between 25 to 40 holdings across a range of sectors. Currently, the portfolio has an average market capitalisation of £173 million (29 March 2019). There is a heavy weighing to support services and software and significant exposure to financial services.
The minimum investment is £50,000. Blankstone Sington believes this is the smallest sum an investor needs to place to allow sufficient diversification. This means ISA investors will need to transfer existing ISAs as well if they intend to invest new money.
The nature of the portfolio companies – cash generative and profitable – means the yield is expected to be between 1.5%–3%, which is variable and not guaranteed. Investors can choose to set this against the management charge, have the income paid out or reinvested.
What kind of companies are in the portfolio?
One example is Bolton-based K3 Capital, which listed on AIM in April 2017 and has a market cap of £106.8m (2 Nov 2018). It acts as a corporate finance matchmaker: if you want to sell your business, K3 Capital will help you find the right buyer.
Its niche is small businesses valued
between £50,000 and £50 million, an under-represented area in the corporate
finance world. The business model is cash generative: it takes
transaction fees but also non-contingent fees which contribute towards fixed
costs whatever the outcome of the deal. Management have a significant stake in
the firm so their interests are aligned with shareholders.
Blankstone Sington views an increased regulatory burden as one of the certainties of modern life, alongside death and taxes. Ideagen offers governance, risk and compliance software to tackle risk management in an organisation. It’s a dull but importance service. Instances of poor governance, risk and compliance in recent times include LIBOR rate-rigging, PPI mis-selling, BP oil spill and even the tragic Alton Towers crash. Companies are increasingly prioritising governance, risk and compliance and Ideagen can help.
The software is used by over 3,000 organisations in life sciences, aerospace and defence, finance, transport and healthcare. Blankstone Sington believes all are sectors in long-term growth trends. Clients include BAE Systems, Emirates, Shell and the European Central Bank as well as 150 hospitals in the UK and US. Again, senior management has a sizeable stake in the company and a recent placing funded an acquisition of a complementary software company.
Access to your investment
Investors can withdraw at any time provided £50,000 is left in the service. Investors can also choose to fully liquidate the portfolio. In normal market conditions Blankstone Sington aims to fulfil withdrawal requests within five working days. It may take longer for larger sales and in times of low market liquidity.
Risks – important
This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice.
AIM IHT portfolios are high-risk so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks.
AIM stocks can be hard to sell, particularly at the smaller end of the market, and can be illiquid. Blankstone Sington’s focus on smaller companies may emphasise this concern. AIM shares can be very volatile especially if the market falls sharply. The difference between the buying and selling price of AIM-listed shares is often wider than the spread for shares listed on the main market.
Tax rules can change and benefits depend on circumstances. Eligibility for BPR is assessed at the date of death and will depend on the companies in the portfolio remaining qualifying. Broadly speaking, you will need to have held a BPR qualifying stock for at least two years and still hold it on death to qualify.
Many firms are under £100 million by market capitalisation. By their very nature these are not only less liquid but riskier investments as they are smaller businesses.
There is considerable key man risk as Stephen English is central to the service.
Fees and charges
The absence of an initial charge is welcome, and the annual charges are very competitive for a larger IHT portfolio. An overall summary of the charges is shown below.
|Dealing fees||£25 per trade|
|Annual management charge tiers||1.25% plus VAT on first £500,000|
|1% plus VAT on £500,000 to £1m|
|0.5% plus VAT over £1m|
See example of the total charges over 5 years
The above is a summary of the total costs and charges: please see the provider’s documents for details. If you require a detailed breakdown or a personalised illustration, please contact us.
Blankstone Sington is a longstanding investment manager with much experience in smaller company investing. This is a well thought out service, in our view. It could be a consideration for investors looking to invest in the smaller end of the AIM market. It could also be an option for those with a large amount in AIM IHT portfolios who want to diversify some of their holdings away from the larger end of the AIM market (the traditional preserve of many IHT portfolios). Performance has been strong and the team has so far delivered on its objectives, but as always there are no guarantees.
The Chancellor has requested a review of a range of aspects of IHT to simplify the tax system. The review timescales, its scope and impact are unknown. Currently, investments qualifying for Business Property Relief should be free from IHT after two years. Tax rules can and do change and benefits depend on circumstances.
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Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.
- Portfolio size
- £24.0 million
- Average market cap
- £203.0 million
- Initial charge
- Saving via Wealth Club
- Net initial charge