Blankstone Sington AIM IHT ISA

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Blankstone Sington is a stockbroker and investment manager based in Liverpool. Its AIM IHT service is headed up by Neil Blankstone, who is the second generation of the company’s original founders. Neil has worked in the business for 30 years. The service was launched in 2010 and currently manages £43.5 million on behalf of its investors.

The investment strategy has a bias towards smaller sized companies on the AIM market, with an emphasis on value investing.

The portfolio benefits from a competitive fee structure. For larger investments, the annual charge on part of the portfolio can be as little as 0.75%.

Important: The information on this website is for experienced investors. It is not advice nor a research or personal recommendation to invest. If you’re unsure, please seek advice. Investments are for the long term. They are high risk and illiquid and can fall as well as rise in value, so you could get back less than you invest.

ISA: apply online or top up

An AIM ISA lets you hang on to the ISA perks of tax-free growth and income yet also potentially pass on your ISA IHT free. This is thanks to Business Property Relief (BPR) which is available for certain AIM shares. If you hold the shares for at least two years and on death, under current rules they should be free of IHT. Tax rules can change and benefits depend on circumstances.

Highlights

  • 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 attractive for larger investments
  • Blankstone Sington has over thirty years’ experience in smaller companies investing
  • Minimum investment £40,000 (£20,000 existing investors)
  • Available both in an ISA and outside an ISA
  • Apply online (ISA only)

The manager

Blankstone Sington is a stockbroker and investment manager based in Liverpool. Whilst Liverpool may not scream financial services, 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 original exchange building. The business was founded in 1976 by former Liverpool Stock Exchange Chairman, Michael Blankstone, and his business partner, Reggie Sington. 

The AIM IHT service was launched in 2010 and is headed up by Neil Blankstone, who is the second generation of the company’s original founders. Neil has worked in the business for 30 years and has a dual role of business development and management of the IHT service. Neil has advised on and dealt in AIM securities as part of broader bespoke and advisory managed services since AIM’s inception 25 years ago. 

Neil is supported by three experienced investment professionals, including Blankstone Sington’s Chief Investment Officer, Paul Williams. Paul has overall responsibility for investment research in the business and has led the research department since 1998. He has overseen the research of the AIM service since its inception and is now taking a more active role. In addition to its internal resources, Blankstone Sington has acquired external support to bolster its research of AIM stocks. 

The service is managed by six investment professionals. Blankstone believes a small, close-knit team enables a nimble, high-conviction investment approach. The team includes a dedicated dealer, Peter Kelly, who has over 30 years of experience at Blankstone Sington, a stockbroking firm. The team believes by investing via its in-house dealer it can potentially achieve better pricing when placing trades, particularly within the AIM market, where there are fewer buyers and sellers, although this is not guaranteed. 

The custodian for this service is Oakwood Nominees Limited, which will hold your shares on your behalf.

Investment strategy

Blankstone Sington has been investing in smaller companies for over three decades. The team believes AIM quoted companies offer an 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 a sweet spot in firms with a market cap of between £50 - £300 million. 

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 trying to preserve investors’ capital, whilst trying to avoid the more speculative and volatile companies on AIM. By investing with a focus on value, it hopes to limit risk. The theory is that 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: despite this remember that AIM is high risk and volatile and only for experienced investors.

Investments must exhibit certain attributes. The team looks for companies with what it considers to be the right valuation, strong cash generation and cash flow, a solid history of dividends and a management team with a proven track record. The portfolio typically invests in companies that are founder-led, where management has a stake in the business. 

Current portfolio overview

Investors can expect 25 to 40 holdings across a range of sectors. Currently, the portfolio has a bias towards industrial, technology and financial services businesses. The weighted average market cap is £355 million and the portfolio has 50% invested in businesses with a market cap of less than £250 million (30 June 2021).

The minimum investment is £40,000. Blankstone Sington believes this is the smallest sum that allows 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 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. 

The chart below shows the portfolio sector breakdown for the top 10 sectors, which together account for c.90% of the portfolio. 

Source: Blankstone, as at 30 June 2021.

Source: Blankstone, as at 30 June 2021.

Example of portfolio companies

IG Design Group – Blankstone Sington AIM ISAIG Design Group 

IG Design Group Plc is involved in the design, manufacture, and distribution of gift products. It offers products across four core categories: celebrations, stationery, craft and creative play, gifting, and not-for-sale paper bags. The group operates across multiple regions including UK, Asia, Europe, USA, and Australia. The company was founded by S. Anders Hedlund in 1979 and is headquartered in Eversholt, U K and today is one the UK’s largest manufacturers of Christmas crackers, gift wrapping and greetings cards.

The group has grown considerably in recent years and now has more than 4,000 employees globally and sales in 82 countries. Revenues have also been increasing – the group most recently declared revenues of $873.2 million in FY 2021, up 40% compared to the previous financial year. This growth has supported an increase in its dividend per share from 2.5p in 2016 to 8.75p in 2021. Past performance is not a guide to the future.

Strix Technology – Blankstone Sington AIM IHTStrix Group

Strix is a global leader in the design, manufacture and supply of kettle safety controls and devices involving water heating and temperature control, steam management and water filtration. Strix has sold over 2 billion units, and management estimate that Strix safety controls are used over 1 billion times per day by consumers, in more than 100 countries, and by over 10% of the world’s population. 

Based in the Isle of Man and China, the group has over 850 employees and is a trusted partner with a unique, almost consulting, position between Chinese manufacturers and Western brands.  It has a dominant 55% market share of the global kettle control market. The stock faced some challenges during the coronavirus outbreak as concerns grew over disruption to its Chinese manufacturing plant. Its share price has since recovered strongly and in FY 2020 the company was able to deliver revenue of £95.3 million (only 1.6% down on the previous year, despite the challenging environment) with 3.2% growth in adjusted EBITDA (to £38.1 million) and paid total dividends of 7.85p per share. Past performance is not a guide to the future. Blankstone Sington believes Strix is a high-quality business that presents good value for long-term shareholders. 

Arena Events 

As is to be expected, not all investments will be successful. Arena Events listed on AIM in 2017. It provides temporary stands and seating for events, including Wimbledon, The Grand National, Ryder Cup and even Dancing on Ice, and claims to have never lost a tier-one client. Blankstone first invested in May 2018 at a price of 59.5p.

To support new business wins, capital spending on equipment rose over time, causing net debt to start creeping up. While this spend was driving higher earnings Blankstone was sanguine, but when Arena issued a profit warning in January 2019, the debt burden came into sharper focus. The cause of the profit warning was overtrading, following too many acquisitions in 2018. To deliver critical contracts, extra staff and costs were taken on, which saw profit forecasts decline. In the months that followed, the management team failed to get costs under control, resulting in another profit warning. 

After losing faith in the management team, Blankstone Sington sold its final position in the business at 27p in September 2019. Blankstone Sington now requires evidence of a track record of successful M&A transactions where this is a key tenet of the investment case.

Performance 

Blankstone Sington has a strong long-term performance track record.

The charts below show performance since launch compared with other AIM IHT portfolios available through Wealth Club. Like other IHT portfolios, this is a discretionary managed service so each portfolio is likely to be different. 

Five-year cumulative performance to 30 June 2021

The default view is the performance for this particular offer. You'll be able to see the performance of other AIM ISA offers if you click on the portfolio names above. Source: Blankstone Sington and other AIM ISA managers. Performance is shown net of fees, excluding initial charges, with dividends reinvested, based on the average portfolio performance across the service, except for Puma and Fundamental which shows the performance of one example portfolio. Past performance is not a guide to the future. Dividends are variable and not guaranteed.

Five-year discrete performance

AIM IHT portfolio H1 2021 2020 2019 2018 2017 2016 Five years to 30 June 2021
Blankstone Sington AIM IHT 19.40% 0.50% 11.40% -6.10% 21.80% 14.50% 82.60%

See five-year discrete performance comparison of all available AIM IHT portfolios

Source: AIM ISA managers. Performance is shown net of fees, excluding initial charges, with dividends reinvested, based on the average portfolio performance across the service, except for Puma and Fundamental which shows the performance of one example portfolio. Past performance is not a guide to the future. Dividends are variable and not guaranteed.

Access to your investment

Investors can request partial (subject to a minimum of £40,000 being left in the service) or full withdrawals from the portfolio at any time, subject to liquidity. In normal market conditions, Blankstone Sington aims to fulfil withdrawal requests within five working days but this is not guaranteed. 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 of the companies invested in are under £100 million by market capitalisation. By nature, these are not only less liquid but also riskier investments as they are smaller businesses. 

Treasury review

A previous Chancellor requested a review of IHT to simplify the tax system. A report was published in July 2019, but this has not yet led to any rule changes. Please remember, tax rules can and do change and benefits depend on circumstances.

Charges

A summary of the main charges and savings is shown below. The investment may have additional charges and expenses; please see the provider documents for more details. If you would like a full breakdown or a personal illustration, please let us know.

Full initial charge nil
Wealth Club initial saving
Net initial charge through Wealth Club nil
Annual management charge Tiered
(1.25% on first £500k; 0.75% over £500k)
Administration charge 0.25%
Dealing fee nil
Performance fee
Exit fee
All fees and charges are stated exclusive of VAT, which may be applicable in some cases.

See example of the total charges over 5 years

Our view

Blankstone Sington is a longstanding investment manager with experience in smaller company investing. The service is well thought through in our view and its investment strategy – to seek value from investing in smaller AIM stocks – is differentiated from other larger AIM IHT portfolio services. The service has built a strong longer-term performance track record. It has also shown lower than average volatility, although, please note, past performance is no guide to future performance. 

The service continues to benefit from a competitive fee structure. For larger investments, the annual charge on part of the portfolio can be as little as 0.75%. 

In our view, the strategy might appeal to investors wishing to invest in the smaller end of the AIM market. The service 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.

Read important documents and apply

See five-year performance of shares mentioned above

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.

The details

Portfolio size
£43.5 million
Average market cap
£355 million
Initial charge
Nil
Saving via Wealth Club
-
Net initial charge
-
AMC
1.25%
Last updated: 4 August 2021