Unicorn AIM IHT ISA

The Unicorn AIM IHT Portfolio Service is run by a specialist UK smaller company investor, Unicorn Asset Management (‘Unicorn’), which began investing in AIM in 2000. Unicorn currently manages £1.3 billion across its range of predominantly UK equity focused investment mandates; of this, £29 million is within the AIM IHT Portfolio Service (March 2022).

The investment team is headed up Chris Hutchinson. Chris 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. 

  • Portfolio of 25-40 AIM stocks
  • Income or growth focus, plus responsible investment options available
  • Minimum investment £50,000 (or £20,000 if topping up an existing portfolio) – 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 application form and post it to us
  • Apply outside an ISA: please contact us for details

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.

ISA: apply online or top up

The manager

Unicorn, the Investment Adviser to the service, is a specialist AIM, small and mid-cap manager. It manages more than £1.3 billion (March 2022) across its five UK equity funds, Unicorn Mastertrust, the Unicorn AIM VCT, and Unicorn AIM IHT Portfolio Service. Overall, it manages more than £400 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 eight 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:

 

Investment strategy

There are more than 800 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 

As a signatory of the United Nations Principles of Responsible Investment, Unicorn has 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.

The Dividend Focus and Growth Focus portfolios will be managed in line with Unicorn’s Responsible Investment Policy.

In addition, each portfolio has a specific responsible investment subset available (Responsible Growth Focus Portfolio and Responsible Dividend Focus Portfolio) for investors who wish to 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 six stocks that are excluded from the Responsible Portfolios (Advanced Medical Solutions, IQE, Gooch & Housego, Accesso Technology Group, City Pub Group, and Virgin Wines, all 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 62% invested in businesses with a market cap greater than £250 million (average £535 million). The Dividend Focus Portfolio has a bias towards smaller income-generative companies, with an average market cap of £342 million. Around 32% 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.

All portfolio details shown below, including sector breakdown and performance, relate to the wider Growth Focus and Dividend Focus Portfolios, rather than the Responsible Investment Portfolios.

Growth Focus Portfolio - sector breakdown (%)

Dividend Focus Portfolio - sector breakdown (%)

Source: Unicorn Asset Management, as at 31 March 2022

Unicorn AIM IHT Portfolios - market capitalisation breakdown (%)

Source: Unicorn Asset Management, as at 31 March 2022

Examples of portfolio companies

GB Group__Unicorn_AIM_IHTGB Group – Growth Focus 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. 

GBG now has over 20,000 clients and operates in more than 70 countries, processing over 210 million digital transaction every day. In a trading update for FY 2022, GBG saw revenues increase ahead of market expectations to £242 million, up from £87.49 million in FY 2017. Past performance is not a guide to the future.

Gateley_Unicorn_Dividend_PortfolioGateley Holdings – Dividend Focus portfolio

Gateley Holdings was the first commercial law firm to list on the market in 2015.

Since then, performance has been strong, with revenue topping £100m for the first time in 2019. The group is now the UK’s most active corporate legal adviser, acting for 18 of the UK’s largest housebuilders and five of the six largest banks.

The business is run conservatively, focusing on the long-term with a strong balance sheet and free cash generation. The shares currently yield over 3.3%, but there’s also potential for long-term capital growth. In its most recent results for six months to October 2021, the company reported revenues of £62.3 million, an increase of more than 20% year-on-year growth.

Conviviality Retail

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.

Performance

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 31 March 2022

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: Unicorn Asset Management 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 YTD 2021 2020 2019 2018 2017 Five years to 31 Mar 2022
Unicorn Dividend Focus AIM IHT -9.4% 13.1% -5.8% 21.4% -15.0% 21.3% 14.1%
Unicorn Growth Focus AIM IHT -14.7% 4.6% 7.2% 34.0% -24.4% 42.3% 30.8%

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

Source: AIM ISA managers (31 March 2022). 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. 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. 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 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%**
Administration charge 0.25%**
Dealing fee 0.85%
Performance fee
Exit fee 1%
All fees and charges are stated exclusive of VAT, which may be applicable in some cases. *Initial charge waived on top ups. **There is a minimum annual management charge of £600 and a minimum administration charge of £100.

See example of the total charges over 5 years

    Our view

    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 appears well placed to manage an AIM IHT Service, particularly given the strong overlap with its other investment 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, as well as 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.

    The details

    Portfolio size
    £29.0 million
    Average market cap
    £535 million
    Initial charge
    4.5%
    Saving via Wealth Club
    3.5%
    Net initial charge
    1.0%
    AMC
    1.75%
    Last updated: 29 April 2022

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