Unicorn AIM IHT ISA
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- New subscription: apply online using the link below
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You can also apply outside an ISA using this application form. If you have any questions, please do not hesitate to contact us.
The Unicorn AIM IHT Portfolio Service is run by specialist UK smaller company investor, Unicorn Asset Management (‘Unicorn’), which began investing in AIM in 2000.
Launched in 2016, the Unicorn AIM IHT Portfolio Service seeks to invest in a portfolio of 25-40 AIM-quoted companies that qualify for Business Relief. It focuses on established, profitable, dividend-paying businesses whose founders or management team have retained a meaningful shareholding. Investors can choose between Dividend Focus or Growth Focus. Both follow a similar investment strategy, however, the growth portfolio places greater emphasis on companies that can deliver sustainable earnings growth, whilst the dividend portfolio on companies paying attractive and growing dividends (not guaranteed).
Both the Growth and Dividend Focus portfolios offer responsible investment options, which follow an enhanced responsible investment strategy and seek to avoid investments in companies operating in areas such as animal testing, and those with significant ESG controversies.
Unicorn currently manages £1.5 billion across its range of predominantly UK equity focused investment mandates; of this, £29 million is within the AIM IHT Portfolio Service (June 2021).
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.
- Chris Hutchinson, the lead investment adviser, is one of the best-known and most experienced investors on AIM and is supported by the wider Unicorn investment team.
- Seeks to invest in the “blue chips” of AIM: profitable, dividend-paying companies
- Income or growth focus available: any income from an ISA will be paid tax-free, quarterly
- Responsible investment options available
- Available in or outside an ISA
- Save 3.5% on the initial charge
- Minimum investment £50,000 (or £20,000 if topping up an existing portfolio) – you can apply online
Unicorn, the Investment Adviser to the service, is a specialist AIM, small and mid-cap manager. It manages more than £1.5 billion (as at 30 June 2021) across its five UK equity funds, Unicorn Mastertrust, the Unicorn AIM VCT, and Unicorn AIM IHT Portfolio Service. Overall, it manages more than £550 million in AIM stocks.
Unicorn has been investing in AIM since the company’s inception in 2000. It has its own dedicated in-house research team which seeks to uncover attractive opportunities that may not yet be known to other investment groups.
There are six members in the investment team, with Chris Hutchinson acting as senior investment manager. Mr Hutchinson joined Unicorn in 2005 and has more than 20 years’ experience managing portfolios of UK smaller companies. He is the lead manager of the Unicorn AIM VCT (the UK’s largest AIM VCT) as well as the Unicorn Outstanding British Companies Fund and will have primary responsibility for selecting stocks for the service.
WM Capital Management Limited (WM) is the portfolio Discretionary Investment Manager, responsible for the day-to-day management of investor portfolios, including the allocation of stocks, compliance and taking legal advice on stocks’ BPR qualifying status. James Brearley & Sons Limited (James Brearley) is the Administrator and Custodian, holding shares on investors’ behalf.
Watch a video interview with Alex Game of Unicorn Asset Management:
There are around 820 firms on AIM. As Chris Hutchinson has put it: ‘Among the dross there are some great businesses.'
The service sticks to what Mr Hutchinson considers to be the fundamentals of stock picking. At its core, the service invests in businesses that sell a product or service that offers tangible benefits to its consumers. These companies should be established, profitable, and cash-generative with minimal gearing.
The team favours companies whose founders or management team have retained a meaningful stake in the business. In Unicorn’s experience, these tend to be more risk-averse and focused on long-term growth, traits that complement the service.
Investors have the choice of Dividend Focus or Growth Focus. Both follow a similar investment strategy but whilst the growth portfolio places greater emphasis on companies that Unicorn believes can deliver sustainable earnings growth, the dividend portfolio focuses on companies paying attractive and potentially growing dividends (not guaranteed).
Responsible Investment Portfolio Service options
Unicorn is a signatory of the United Nations Principles of Responsible Investment. This means it has, amongst other obligations, a company-wide Responsible Investment Policy, which commits its investment team to consider Environmental, Social, and Governance (ESG) issues when selecting stocks for all its investment mandates.
Both the Dividend Focus and Growth Focus portfolios will be managed in line with Unicorn’s Responsible Investment Policy.
In addition, each of the two portfolios specifically offers a Responsible investment option (Responsible Growth Focus Portfolio and Responsible Dividend Focus Portfolio) for investors who wish to go further and adopt stricter sector limits and exclusions:
- No companies that generate any revenues from any of the following sectors: adult entertainment, animal welfare, genetic engineering, gambling, and tobacco manufacture
- No companies that generate 5% or more of their revenues from alcohol, defence & weapons and nuclear power
- The investment team will also exclude companies it considers to be involved in significant ESG controversies
The Responsible Portfolios will apply exclusions but will not hold a stock that is not already held within the Growth Focus or Dividend Focus portfolio on their own investment merit. Please also note the portfolios do not actively seek responsible investments however they do aim to screen out non-responsible ones.
Currently, there are four stocks that are excluded from the Responsible Portfolios (Advanced Medical Solutions and the City Pub Company, both holdings in the Growth Focus portfolio; and Vianet and Youngs Brewery, both holdings in the Dividend Focus portfolio).
Current portfolio overview
Unicorn is sector agnostic although its focus on cash-generative businesses precludes higher-risk sectors such as oil, gas, mining, and commodities as well as biotechnology and other early-stage technology companies. The portfolios are expected to hold 25–40 stocks, with no single stock expected to make up more than 5% of the portfolio.
The growth and dividend portfolios have similar sector exposures but differ in terms of market capitalisation. Overall, the Growth Portfolio is more than 89% invested in businesses with a market cap greater than £250 million (average £642 million). The Dividend Focus Portfolio has a bias towards smaller income-generative companies, with an average market cap of £337 million. Around 68% of the businesses within the dividend portfolio have a market cap above £250 million.
The income portfolio targets a yield of 2-4% per annum and quarterly income payments – not guaranteed.
Source: Unicorn Asset Management, as at 30 June 2021
Source: Unicorn Asset Management, as at 30 June 2021
Examples of portfolio companies
GB Group – Growth portfolio
GB Group (“GBG”) is a technology specialist in fraud, location, and identity data intelligence.
With its suite of products, GBG helps organisations validate and verify the identity and location of their customers. The company looks to set itself apart from the competition using its unique partnerships with leading global data providers. Currently, GBG believes it can verify more than half of the world’s population.
Since 2011, GBG has acquired 12 companies, grown to over 1,000 employees, and operates in more than 70 countries. In a trading update for FY 2021, GBG saw revenues increase ahead of market expectations to £217 million, up from £73.4 million in FY 2016. Past performance is not a guide to the future.
Fulcrum Utility Services – Income portfolio
Based in Sheffield, Fulcrum Utility Services Ltd (“Fulcrum”) is a multi-utility infrastructure and services provider.
Its main business is the design, build, and maintenance of energy connections and their related infrastructure. It targets four key sectors: housing, industrial & commercial property, maintenance & ownership of distribution infrastructure, and smart metering.
Recently, the company has been targeting the sectors of clean energy and electric vehicle (“EV”) charging, particularly given the UK’s clean energy target of 2050. To accommodate this industry change, Fulcrum has recruited EV specialists and formed several partnerships within the sector, including ChargePoint and The Bayford Group.
Fulcrum recorded revenues of £47.1 million in FY 2021, an increase of 2.2% compared to 2020, so it appears to have returned to normal trading after the challenges caused by the global pandemic. Past performance is not a guide to the future.
As is to be expected, not all investments work out. One example is Conviviality Retail.
Formerly known as Bargain Booze Limited, Conviviality was at one point a stock market darling. The company floated on AIM in 2013 at 100p per share and expanded rapidly with a series of acquisitions. At its high, the share price hit 426p and the business had doubled profits to £22.5 million.
Then, in early 2018, the company issued a number of profit warnings. It was later announced that the company had an undisclosed £30 million tax bill which led to the share price collapsing. The business was placed into administration after failing to secure emergency funding.
The chart below shows the performance of the service over the last five years 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 2021
Five-year discrete performance
|AIM IHT portfolio||H1 2021||2020||2019||2018||2017||2016||Five years to 30 June 2021|
|Unicorn Dividend Focus AIM IHT||19.00%||-5.80%||21.40%||-15.00%||21.30%||n/a||60.20%|
|Unicorn Growth Focus AIM IHT||8.80%||7.20%||34.00%||-24.40%||42.30%||n/a||99.50%|
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
Investments in this portfolio are for the long term, however, you can withdraw your funds from the Unicorn AIM IHT Portfolio Service at any time, subject to payment of the exit fee and market liquidity. The exit fee depends on the residual portfolio value and ranges from 1% to 2%. Additionally, Unicorn may set a minimum surrender amount if a partial withdrawal is requested – please see the provider’s documents for details.
Funds withdrawn from the Service will be subject to IHT and any funds withdrawn from an ISA will no longer be eligible for ISA tax benefits, unless transferred to another ISA provider.
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. 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.
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.
A summary of the main charges and savings for an investment within an ISA is shown below. If you wish to invest outside an ISA, please see the provider's documents. 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||4.5%|
|Wealth Club initial saving||3.5%|
|Net initial charge through Wealth Club||1%|
|Annual management charge||1.75%|
See example of the total charges over 5 years
Unicorn is an established fund manager with significant experience in the AIM market and managing UK small-cap portfolios. The team has been investing in AIM for over two decades and also manage the UK’s largest AIM VCT.
Unicorn believes it is well placed to manage an AIM IHT Service, particularly given the strong overlap with its other mandates, which should provide the service with valuable perspective.
The investment strategy is deliberately uncomplicated, targeting established and profitable companies, preferably whose founders or management team have retained a significant stake in their business. Investors into the service have a choice between the dividend or growth portfolio. For the growth portfolio, the emphasis is on companies demonstrating an ability to grow earnings, whilst the income portfolio is focused on the sustainability of dividend payments.
The service offers responsible investment options for both portfolios which some investors may find appealing.
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.
- Portfolio size
- £29.0 million
- Average market cap
- £642 million
- Initial charge
- Saving via Wealth Club
- Net initial charge