Guinness AIM EIS

This is the only EIS portfolio investing specifically in AIM-listed companies. The offer aims to invest in 10 or more businesses across a variety of sectors. Previous investments made by the fund include English sparkling wine producer Chapel Down and one of the largest retailers of fishing tackle in the UK.

Highlights

  • Portfolio of 10 or more AIM listed companies expected
  • Target return of £1.30 per £1 invested net of fees, not including tax relief (not guaranteed)
  • One EIS5 tax certificate for entire portfolio
  • Investee firms must have advance assurance
  • Deferred fees payable on exit can help maximise growth
  • Minimum investment £20,000

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.

The manager

Guinness Asset Management is a specialist fund manager. Andrew Martin Smith is the lead manager on this AIM EIS and is a former CEO of Hambro Asset Management (which merged with Guinness in 1998). As well as the Guinness AIM EIS, Mr Martin Smith manages the Guinness Global Money Managers Fund and has been making small and unquoted company investments for many years.

Watch a video interview with fund manager Andrew Martin Smith:

Recorded 7 November 2018

The offer

This latest offer is looking to raise £10 million. 

The target is to return over £1.30 per £1 invested at launch with a timeframe of four to five years, although this is not guaranteed. As most portfolio companies are listed on AIM, there is some natural liquidity and an exit route, although please remember AIM investments are generally less liquid than more mainstream investments: they can also be more volatile. Up to to 20% of the fund may be invested in pre-IPO or NEX companies.

The offer closes on 6 April 2020 and Guinness intends to deploy investors’ funds within 12 months (not guaranteed).

Potential benefits of AIM EIS

Firstly, the exit options may be clearer as AIM businesses can present a natural exit route and there is some external price validation. Investors should be able to sell their holdings after three or more years with relative ease (dependent on market conditions at the time). Please note that this is compared with unquoted companies: shares in AIM can still be illiquid and hard to sell when compared with the main market. Market forces determine the price, rather than the investment manager or a third party. 

Whilst the reporting standards required for AIM are not as rigorous as the main market, investors may have increased transparency on the underlying company performance as against unquoted EIS businesses. 

AIM businesses that qualify for EIS tend to be newly listed. Those that are successful can offer good growth prospects for investors – remember though that many don’t work out so well. 

The downsides of AIM EIS

The flipside to having price validation and live pricing is that market sentiment and factors could go against EIS investors. Their investment is vulnerable to this sentiment and the associated volatility. 

Unquoted EIS investments are less tied to the markets. Their investment managers typically have a greater say in the running of the business. They will take board seats or non-executive roles. Managers of AIM shares tend to take a less active role.

As the price of an AIM business is driven by the market, the manager doesn’t have the same scope to negotiate entry price. There is a limited choice in the universe of stocks that meet EIS qualification rules.

The quality of businesses within this AIM EIS portfolio will be dependent on what comes to market in the next twelve months. It is also important to note that the number of AIM IPOs has decreased significantly in recent years, only nine have been announced for 2019 and of these not all would be EIS-qualifying. 

Risks – important

This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice. EIS investments are high-risk so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. They also tend to be illiquid and hard to sell and value. Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks. 

Tax rules can change, and benefits depend on circumstances.

This EIS fund invests in early-stage businesses which are more likely to fail than larger ones, so you should expect a number of failures in the portfolio.

AIM shares can be volatile and could suffer extreme volatility if the market falls sharply. The difference between the buying and selling price of AIM-listed companies is often wider than those listed on the main market. 

Charges and saving

A summary of the main charges and savings is shown below. Some of these will be payable by the investor, whilst others by the investee companies. The investment may have additional charges and expenses: please see the provider documents, including the Key Information Document, for more details.

Investor charges
Full initial charge 5%
Wealth Club initial saving 0.5%
Net initial charge through Wealth Club 4.5%
Annual management charge 1.75%
Administration charge 0.35%
Performance fee 20%
Investee company charges
Initial charge
Annual charges
All fees and charges are stated exclusive of VAT, which may be applicable in some cases. Any fees and charges payable by the investee companies or the underlying businesses do not directly come out of your investment. However, they will effectively reduce the returns generated by investee companies and therefore impact your investment.

More detail on the charges

Our view

This is the only specific AIM EIS fund currently available. AIM has been a mixed market ever since it launched over two decades ago, however amongst the poor-quality companies there are also some gems. Mr Martin Smith seeks to find these but so do many other AIM managers. The fees are deferred until exit, which can help maximise returns: please note however the performance fee kicks in at a low hurdle of £1.

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

Type
Fund
Sector
AIM
Target return
1.3x
Funds raised / sought
£10.0 million sought
Minimum investment
£20,000
Deadline
6 Apr 2020
Last updated: 24 October 2019

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