Unicorn AIM ISA
This newly launched discretionary service aims to take advantage of the Business Property Relief (BPR) rules that means certain companies are exempt from an investor’s estate after two years of investment. This service offers an income or a growth option investing in AIM listed companies, advised upon by smaller company specialist Unicorn Asset Management.
- Established AIM manager
- Specialist smaller company manager
- Invests in profitable, dividend paying companies
- Income or growth option
Unicorn Asset Management is a specialist fund manager with a bias towards smaller companies. Chris Hutchinson is the senior fund manager and is supported by a team of two other senior managers and two more junior managers, plus an investment committee. Unicorn manages an AIM VCT, a range of open ended funds and this IHT product with approximately £1 billion under management that has £290 million invested in AIM listed companies. Unicorn is the investment adviser to this service.
Target return and strategy
Unicorn’s process aims to identify companies where management own a significant stake in the business and have a demonstrable track record of making money for shareholders. Pricing power is important, and the products or service the company is selling need to be in growing markets. Companies have to be profitable and hopefully dividend paying; Mr Hutchinson is a firm believer that if management has a big stake, they will be focused on the dividends as they are also big beneficiaries. Analysing the cash flow is also vital – does the company turn reported profit into cash?
Each portfolio will have between 25 and 40 holdings and each company tends to have a market capitalisation of at least £100 million. Returning to the dividend theme, a long history of paying dividends is preferable. For these portfolios Mr Hutchinson is looking for the “blue chip” AIM companies; he thinks this narrows down the AIM universe to about 100 to 150 stocks. He likes investing in companies where big stakes are owned by families and the businesses have demonstrated consistent growth in sales, profits and dividends over many years.
As an indication, Conviviality Retail (a drinks wholesale group), SafeStyle UK Ltd. (window and door manufacturer) and Redcentric plc. (IT service provider) feature in both the income and growth portfolios.
There will often be crossover between holdings in this portfolio and either the Unicorn Income fund or the Unicorn Outstanding British Companies fund.
The service was only launched in December 2015; therefore, no performance figures are available. Investors interested could use either the Unicorn AIM VCT or the Unicorn Income fund (which has about 20% invested in AIM stocks) for information for a related historical performance insight; remembering that past performance is no indicator of future performance and that these are different investment vehicles.
Liquidity of companies listed on AIM is the key risk in this service, as it can be a volatile market with little trading at certain points. Both the Income and Growth portfolios will be fairly concentrated with between 25 and 40 holdings.
There is an initial charge of 4.5% plus VAT - reduced to 1% through Wealth Club. The annual management fee is 2% plus VAT. In addition, there are dealing fees of up to 0.5% (plus £5 per stock) and exit fees of 1% (except upon death).
Unicorn has always had a small company bias across their range of products and can rightly be called a specialist in this area. They are experienced in smaller company and AIM management and have a clear vision for what they want to achieve. Identifying long term winners and sticking with them over many years is the key. Of particular interest are the “blue chip” AIM stocks and those with large family shareholdings. This service is managed by a dedicated and talented fund management team and is worthy of consideration.
- Min. Investment
- ISA Available?