Puma AIM IHT ISA

This AIM IHT service is managed by Puma Investments, part of Shore Capital, one of the largest AIM market makers.

Dr Stuart Rollason, an experienced small and mid-cap investment professional, is the lead manager. He was appointed in 2021 having previously managed the AIM IHT service at Kestrel Partners LLP for a decade.

The service currently has £154 million in assets under management (June 2023).

• Portfolio of 30 to 40 AIM stocks
• Bias towards family-owned or founder-controlled firms
• Minimum investment £20,000 - you can apply online
• Apply in an ISA: top up or make a new subscription online using the link below. To transfer existing ISAs, please download, print and complete the ISA Transfer Form and post it to us
• Apply outside an ISA: top up or make a new subscription online using the link below

The manager

The Puma AIM IHT service is managed by Puma Investments, part of the Shore Capital group, which has £1.7 billion in assets under management. £154 million is held within the Puma AIM IHT service (June 2023). 

The lead manager is Dr Stuart Rollason, who joined Puma in May 2021. He is an experienced small and mid-cap investment professional, with 20 years’ experience. He joined from Kestrel Partners LLP, where he led the management of the AIM IHT service for a decade. Dr Rollason is supported by Joseph Cornwall, investment director, who joined Puma in August 2021.

Puma Investment Management Ltd is the investment manager. The custodian is Pershing Securities Ltd, holding shares on investors’ behalf.

Investment strategy

The service targets mature AIM businesses screened across three key metrics: quality, growth, and value. Capital preservation is also a priority.

The strategy focuses on companies with sensible management, particularly those with a stake in the business. Companies will be selected for their potential to generate returns exceeding the cost of capital - not guaranteed.

In addition, the portfolio seeks companies with sustainable margins, sales and profit growth and a sensible balance sheet. A cheap valuation isn’t the most important factor for Puma. A strong balance sheet, with limited gearing, is more important, in its view. The firm focuses on companies with a market cap of at least £50 million.

The targeted hold period for investments is three to five years but longer positions will be considered if the company continues to improve and valuations appear sensible. Holdings will be sold when companies reach what Puma considers to be an appropriate fair value or if the investment team changes its view on a stock. Puma believes it is better to exit a position sooner – even if this results in a loss – than potentially incur a greater loss later on.

Current portfolio overview

Investors will hold a portfolio of around 30-40 shares. Each portfolio aims to closely mirror the investment director’s own portfolio but individual portfolios will vary.

The portfolio seeks to be fully invested in AIM shares that qualify for IHT relief, with only a small cash position (approximately 2-5%). The average position size is 2% to 6%, with no position expected to be greater than 10% of the portfolio.

The portfolio avoids early-stage companies such as loss-making miners, biotechnology companies and high-growth concept stocks.

Currently, the average market capitalisation of companies in the portfolio is £409.1 million (June 2023). The chart below shows the portfolio sector breakdown for the top 10 sectors, which together account for c.88% of the portfolio. 

Sector breakdown (%)

Market capitalisation breakdown (%)

Examples of portfolio companies

Gamma Communications

Since launching in 2002, Gamma Communications has evolved from the owner of a fibre network to the UK market leader of cloud-based telephone systems. 

The group is now well established with customers ranging from the Home Office to regionally managed IT service providers. With the UK currently making up 85% of group revenues (December 2022), Gamma is looking to expand into Europe where adoption of cloud telephony technology is growing. 

Gamma rates highly across Puma’s three metrics: quality, growth, and valuation owing in part to its European expansion, strong levels of recurring revenues, and a significant market de-rating in 2022, which has left it attractively priced, in Puma’s opinion. 

The market capitalisation of the business was £1.1 billion (June 2023).

Tracsis

Tracsis span out from the University of Leeds in 2004, following the development of crew scheduling software for rail services by Dr Raymond Kwan. Tracsis’s scheduling and rostering software (which helps railways run more efficiently) and condition monitoring hardware (which identifies possible issues with rail infrastructure before a costly failure) are now used by virtually all UK train operating companies. 

More recently, the company has acquired North American train software business RailComm as it looks to expand its product range and access North American train operators. Acquisitions as well as organic growth saw revenues hit c.£39 million for the six months to 31 January 2023, up 34% year-on-year.

Puma invested in Tracsis based on its leading market position and the strength of its products, which are fundamental to the safety and operation of the UK rail network, in Puma’s opinion. It believes the company has good growth prospects, and is undervalued when accounting for the long-term opportunity in North America. 

Tracsis has a current market capitalisation of approximately £270 million (June 2023).

Patisserie Holdings

As is to be expected, not all investments work out. One example is Patisserie Valerie.

Patisserie Holdings was formally placed into administration in January 2019 following the discovery of extensive fraudulent accounting irregularities back in October 2018. The shares have been marked down to zero with no return expected for shareholders.

Performance

The Puma AIM IHT service was launched in 2014. The chart below shows performance over five years compared against a peer group of other AIM ISA portfolios available via 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 2023

Access to your investment

Investments in this portfolio are for the long term. However, if your circumstances change, you can request partial or full withdrawals from the portfolio at any time, subject to liquidity. In normal market conditions, Puma aims to fulfil withdrawal requests within two weeks but this is not guaranteed. Any amount you withdraw will no longer be IHT free. 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. 

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.

Our view

The service targets mature AIM businesses screened across three key metrics: quality, growth and value. Notably, the portfolio steers clear of the AIM market’s increasing number of early-stage businesses, biotechnology businesses, and high growth concept stocks. The resulting portfolio is spread across a variety of sectors and has a bias towards businesses operating within industrial support services and construction and materials. 

The service has followed the same strategy since its inception despite a change of management teams in 2021. The service’s current lead manager, Stuart Rollason, brings significant experience, having managed AIM IHT portfolios for over a decade. However, it should be noted that this is a small team, with just two members. 

The fees are middle of the range compared with other AIM ISA portfolios. The minimum of £20,000 could make it a contender for this year’s ISA subscription.

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.