| Portfolio size: | £170.0 million |
|---|---|
| Average market cap: | £314.7 million |
| Wealth Club initial saving: | 1.0% |
| Net initial charge: | 1.0% |
| Minimum investment: | £20,000 |
| Portfolio size: | £170.0 million |
|---|---|
| Average market cap: | £314.7 million |
| Wealth Club initial saving: | 1.0% |
| Net initial charge: | 1.0% |
| Minimum investment: | £20,000 |
The Downing AIM IHT ISA portfolio aims to make long-term investments into smaller, often unloved, AIM-quoted businesses available at what Downing considers to be an attractive valuation.
The £170 million AIM IHT portfolio is run by Downing Fund Managers, the boutique investment arm of Downing LLP, which manages a total of £589 million (June 2025) across a range of investment funds, all broadly following the same investment philosophy.
The portfolio offers two types of insurance. The first, Wealth Guard, offers protection against a portfolio loss of up to 20% for at least the first two years. The protection is available at no extra cost and payable to the estates of investors below the age of 90 on death. There is also optional life cover for investors under the age of 85 at the time of investment.
- Portfolio of 25 to 40 AIM stocks
- Value focus with a preference for smaller AIM companies
- Minimum investment £20,000
- Apply in an ISA: to top up, make a new subscription or transfer existing ISAs — please download, print and complete the ISA Application Form and post it to us.
- Apply outside an ISA: please download, print and complete the Application form (outside ISA) and post it to us
Important: The information on this website is for experienced investors. It is not a 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: you could lose all the money you invest.
The manager
Downing LLP was founded in 1986 and is a specialist investment management business with a focus on tax efficient investments. It manages £2.1 billion of assets (December 2024).
The AIM IHT portfolio is managed Downing Fund Managers (“DFM”), part of Downing LLP. DFM is headed by Judith MacKenzie who has around 25 years’ experience investing in small UK businesses. The DFM team now stands at 15 and together they manage £589 million across a number of UK equity investment mandates, £170 million of which is within the Downing AIM IHT & ISA service (June 2025).
Downing is responsible for the day-to-day management of investor portfolios. The Custodian is Third Platform Services Limited, holding shares on investors’ behalf. Wealth Guard and life cover are provided by an A-rated insurer.
Investment strategy
The team aims to invest in companies when it believes they are undervalued and there is a catalyst for the company to recover. Companies often become undervalued when there is a perception something is wrong with them, which prevents investors from taking a closer look, causing, in turn, the shares to trade cheaply. For this reason, value investing is not for the fainthearted as some companies in this category may be in financial distress.
The team takes it one step further, looking to buy a material minority shareholding so as to be able to influence the company management. This can involve working with other institutional shareholders to appoint a new management team with a new strategy, sell off non-core assets, restructure the business, or put in place long-term incentive plans.
This strategy is applied across all the funds the team manages. Companies in the AIM IHT ISA portfolio will vary in size but will typically have a market capitalisation of no more than £500 million at the time of the initial investment.
Current portfolio overview
The portfolio currently contains approximately 30 companies, spread across a variety of sectors and the market cap spectrum. There is a skew towards industrial services, which represent around 40% of the portfolio.
Approximately 50% of the portfolio is currently invested in businesses valued at £250 million or less. The service has less exposure (c.15%) to AIM stocks valued in excess of £500 million (March 2025). The average market cap of the portfolio is £314.7 million.
The charts below show the portfolio sector breakdown and the market cap value distribution.
Sector breakdown (%)
Market capitalisation breakdown (%)
Source: Downing, as at 30 June 2025.
Examples of portfolio companies
James Latham
James Latham is one of the UK and Ireland’s largest independent distributors of timber, panels, and decorative surfaces.
Named after its founder, the business started importing hardwoods in 1757. Since then, eight generations of the family have continued to expand the business. Downing likes that the business is still family-owned as it means decisions are typically taken with a long-term perspective.
The group reported revenues of £366.6 million in its last financial year, broadly in line with the previous year. This performance reflects a shift in customer preference towards cheaper products, which offset gains from increased like-for-like volumes. Despite ongoing cost pressures from stubborn inflation, the company successfully managed its overheads, achieving gross margins of 16.8%, only slightly below the year prior.
James Latham currently has a market cap of £233.9 million (June 2025).
Avingtrans
Avingtrans designs, manufactures, and supplies critical components and systems to the energy, medical, and industrial sectors.
The company’s growth strategy revolves around acquiring specialist engineering business and developing them, aiming to realise value through strategic sales. Since its first acquisition in 2002, Avingtrans has completed three major disposals. Today, it manages a portfolio of 11 brands across its advanced engineering and medical imaging divisions.
In the six months to November 2024, the Group reported record revenues of £79 million, a 21.2% increase compared to the same period the previous year. The growth was driven by the engineering division which benefitted from strong demand in datacentre infrastructure and electric vehicles.
In a more recent trading update, the company upgraded its full-year expectations with continued momentum from engineering driving results.
Avingtrans has a market cap of £139 million (June 2025).
Alliance Pharma
As is to be expected, not all investments work out. Alliance Pharma (“Alliance”) is an example.
Alliance is an international healthcare group which specialises in marketing healthcare and pharmaceutical products. The Group has a large portfolio of consumer brands and prescription medicines which it sources through acquisitions or licensing deals.
In 2022, the Group’s share price declined sharply following disappointing half-year results and a fine from the Competition & Markets Authority (CMA) amid an ongoing investigation. These factors, plus concern over a potential acquisition, led Downing to remove the position from its model in August 2022 and sell down the holding across all client accounts.
Performance
The Downing AIM IHT Service was launched in March 2014. The chart below shows performance over five years compared with other AIM IHT portfolios available through Wealth Club.
The track record prior to December 2019 is based on the return of first investor’s portfolio in the Downing AIM Estate Planning Service and the Downing AIM ISA Service, net of fees. From December 2019 onwards, all investors’ performance across both products have been consolidated, on a net of fee basis.
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 2025
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: Downing 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 which shows the performance of one example portfolio. Past performance is not a guide to the future. Dividends are variable and not guaranteed.
| AIM IHT portfolio | Year to date | 2024 | 2023 | 2022 | 2021 | 2020 | Five years |
|---|---|---|---|---|---|---|---|
| Downing AIM IHT | 9.6% | 6.0% | 6.5% | -10.2% | 26.7% | -3.4% | 71.6% |
See five-year discrete performance comparison of all available AIM IHT portfolios
| AIM IHT portfolio | Year to date | 2024 | 2023 | 2022 | 2021 | 2020 | Five years |
|---|---|---|---|---|---|---|---|
| Downing AIM IHT | 9.6% | 6.0% | 6.5% | -10.2% | 26.7% | -3.4% | 71.6% |
| Octopus AIM IHT | 1.1% | -7.4% | -7.1% | -32.2% | 18.4% | 0.5% | -15.7% |
| Puma AIM IHT | 2.5% | -6.4% | 5.7% | -14.2% | 28.4% | 2.8% | 36.9% |
| RC Brown AIM IHT | 7.5% | 7.4% | -8.2% | -37.9% | 9.5% | 17.5% | -6.0% |
| Unicorn Dividend Focus AIM IHT | 4.1% | -4.3% | -1.2% | -17.7% | 13.1% | -5.8% | 1.5% |
| Unicorn Growth Focus AIM IHT | -1.4% | -1.6% | -3.9% | -25.7% | 4.6% | 7.2% | -10.6% |
| Whitman AIM IHT | 1.1% | -7.1% | 1.1% | -29.1% | 23.6% | 9.2% | 3.4% |
Source: AIM ISA managers (30 June 2025). Performance is shown net of fees, excluding initial charges, with dividends reinvested, based on the average portfolio performance across the service, except for Puma which shows the performance of one example portfolio. Past performance is not a guide to the future. Dividends are variable and not guaranteed.
Wealth Guard cover and optional life cover
Investors in the Downing AIM IHT ISA service can benefit at no extra cost from Wealth Guard cover, a downside protection policy underwritten by an A-rated insurance provider.
Key details of Wealth Guard are:
- Covering a loss in value of up to 20% of net initial investment (up to £150,000 payout per policy), after fees, for at least two years
- Automatically available to all subscribers under the age of 90 at death
- No exclusions for pre-existing medical conditions
- No additional cost to investors: the premium is paid by Downing
Currently, there is also a separate and optional life cover policy for the first two years. Investors must be under age 85 at the time of making investment to qualify. Investors opting for the life cover policy will only start benefiting from the downside protection cover after two years.
Terms and conditions apply, and some exclusions also apply to the life cover option: please read the provider documents carefully.
Access to your investment
Investments in this portfolio are for the long term. However, if your circumstances change, you can sell some or all of your shares, although sometimes this can take a while depending on market conditions and liquidity. Partial withdrawals are subject to a minimum remaining portfolio value of £15,000. In normal market conditions, Downing aims to fulfil withdrawal requests within 15 working days but this is not guaranteed. For large withdrawal requests, Downing reserves the right to take longer as it may be required to ensure the orderly disposal of investments. Any amount you withdraw will no longer benefit from IHT relief. Withdrawals may result in a Capital Gains Tax liability unless held in an ISA.
Risks – important
This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice. Those considering AIM Inheritance Tax Portfolios should be comfortable with the significant risks of investing on AIM.
AIM IHT portfolios should only form part of a balanced portfolio. Your capital is at risk and you should not invest money you cannot afford to lose. If a service is managed by a small investment team, it could create key person risk. The fewer the companies included in the portfolio, the higher the risk of loss if things don’t go to plan.
AIM stocks can be hard to sell, particularly at the smaller end of the market, and can be illiquid. AIM shares can be very volatile especially if the market falls sharply. The difference between the buying and selling price (spread) of AIM shares is often wider than the spread for shares listed on the main market.
Eligibility for BPR, based on current rules, 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. Tax rules can change and benefits depend on circumstances.
Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks.
In the Budget 2024, it was announced that from 6 April 2026 AIM shares will be eligible for 50% IHT relief (currently 100%).
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 |
2% |
|
Wealth Club initial saving |
1% |
|
Net initial charge through Wealth Club |
1% |
|
Annual management charge |
2% |
|
Administration charge |
— |
|
Dealing fee |
£35 |
|
Performance fee |
— |
|
Exit fee |
— |
|
Optional life cover (two years) |
2.25% |
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
An investment of £20,000 growing by 5% a year (not guaranteed) might be worth £22,511 if you sold it after 5 years, after aggregated costs and charges of £3,014.
The comparative hypothetic value of this investment over the same period with no charges applied would be £25,526.
Wealth Club will receive initial commission (1%) and trail commission (0.6%), this is paid out of the initial and annual management charges, so there is no additional cost to you. These figures are for illustration only. Data as at December 2023, provided by Downing.
The service charges a bargain charge of £35 plus VAT on the acquisition and sale of shares. Bargain charges are payable quarterly in arrears and are capped on annual basis, so that the total cost of the bargain charges for the 12 month period (or less where applicable) through to 31 December will be no more than 0.5% plus VAT per annum of the value of each portfolio at that date. The above illustration assumes the 0.5% cap is met.
Additional fees of 2.25% plus VAT pa apply if you choose the optional life cover, with a lower rate available for joint life second death cover.
Our view
The Downing AIM ISA currently comes with an innovative downside protection policy (Wealth Guard) at no additional cost to investors. It aims to cover a loss in value of up to 20% of the net initial investment for at least two years if you die before the age of 90. The policy could be appealing as it reduces some of the risks of investing in AIM.
Judith MacKenzie is a highly regarded fund manager with more than two decades of experience investing in smaller companies.
The focus on smaller, and often unloved companies may bring diversification to existing portfolios of larger and more popular AIM stocks.
The portfolio’s fees are higher than some of its peers. The minimum of £20,000 could make it a contender for this year’s ISA subscription.
See five-year performance of shares mentioned above
|
|
Year to date |
2024 |
2023 |
2022 |
2021 |
2020 |
|
Alliance Pharma |
41.4% |
13.0% |
-21.9% |
-50.3% |
26.2% |
4.9% |
|
James Latham |
2.0% |
0.8% |
-1.8% |
0.2% |
40.8% |
-1.8% |
|
Avingtrans |
12.5% |
-2.7% |
-8.2% |
1.1% |
53.3% |
1.1% |
Past performance is not a guide to the future. Performance has been calculated on a bid to bid basis with dividends reinvested to 30 June 2025. Source: Morningstar.
This financial promotion has been communicated and approved by Wealth Club Ltd on 3 September 2025
Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.