Unicorn AIM IHT Portfolio
Please note this portfolio is available either within an ISA or without. For the ISA product, please click here.
The Unicorn AIM IHT Portfolio is run by Chris Hutchinson, a successful and very experienced AIM investor. He invests in a portfolio of AIM shares that should qualify for Business Property Relief (BPR) and become free from inheritance tax after two years.
- The manager is one of the best-known and most experienced investors on AIM
- Seeks the “blue chips” of AIM: profitable, dividend-paying companies
- Income or growth portfolios available: any income will be paid quarterly
- ISA available
- Save up to 3.5% on initial charges through Wealth Club
- Minimum £50,000
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Unicorn Asset Management is a specialist in UK smaller companies. About a quarter of the £1.4 billion Unicorn manages is in AIM stocks. Unicorn's AIM VCT is the UK's largest. The Unicorn AIM IHT portfolios, launched in 2016, now hold assets of around £23 million (15 July 2019).
Mr Hutchinson looks for three main characteristics in an AIM company: it must have a track record of producing consistent growth, without masses of debt; it must sell a product or service that delivers a tangible benefit; ideally, the founder and/or management must have a meaningful stake.
Watch an exclusive video interview with manager Chris Hutchinson of Unicorn:
There is a choice of an Income or Growth Portfolio. The former aims to pay out any dividends received quarterly, whilst the latter will reinvest them. Please remember, dividends are variable and not guaranteed.
Each of the two portfolios currently includes 29 AIM-listed companies, spread across a variety of sectors and independently assessed as likely to qualify for BPR. A similar investment strategy applies to both. However, for the Income portfolio, a greater emphasis is placed on the level and sustainability of dividends.
Mr Hutchinson is looking for established, profitable, cash-generative businesses. Indeed, the average market cap is £476 million for the Growth Portfolio and £342 million for the Income Portfolio (June 2019).
All the companies across the two portfolios were profitable at the time of investment. All but three pay dividends (June 2019).
Mr Hutchinson aims to avoid any companies with significant debt, which are burning through cash or relying on regular rounds of fundraising, and he steers clear of those he doesn’t understand. For instance, he avoids investing in oil, gas, mining and commodities along with biotech and early-stage tech companies. He prefers businesses where the founders – or the founding family – still have a significant stake.
PortfolioThe current portfolio breakdowns are shown below:
Source: Unicorn Asset Management - as at 30 June 2019
Income portfolio – some examples
James Halstead plc is a major international group that manufactures contract and consumer flooring. Its products are used all over the world, including in high-profile projects such as on Royal Caribbean’s "Freedom of the Seas", the world’s largest cruise ship and in every carriage of the highest train on the planet, the Machu Picchu Railway in Peru.
The business has been in the same family for four generations, since 1915. The company is worth just over £1 billion (July 2019). James Halstead is the largest holding in the Income Portfolio and third in the Growth Portfolio.
RWS Holdings is one of the world's leading translation and IP services companies. In one year alone it translated over 500 million words, 80,000 patent and IP documents, and 65,000 life sciences projects.
The company is worth just under £1.8 billion (July 2019). RWS is the fourth largest holding in the Income Portfolio and the largest holding in the Growth Portfolio.
Growth portfolio – some examples
Churchill China is a leading manufacturer of high-quality ceramic crockery. The company can trace its origins back to 1795 and the foundation of its first factory in the heart of what later became the Staffordshire Potteries.
Over the years the company has combined heritage and innovation. One of its original patterns, Blue Willow, is still in production after over 100 years. At the same time, Churchill has progressively developed, building a strong reputation as an innovative and reliable supplier of quality table-top products.
To date, Churchill products are used in hospitality establishments in over 70 countries worldwide, achieved through a 508 strong global distributor network. Portfolio company case studies Churchill China exhibits many of the qualities Unicorn looks for in an investment opportunity: a high-quality product offering, a strong track record of earnings growth and consistent delivery against market expectations, although please note past performance is not a guide to the future. In addition, Churchill China still is, in some respects, a family business. The Roper family has been at the helm since 1922 and still holds a significant share of the business.
The company is worth £165 million (July 2019).
James Cropper is a specialist materials group and maker of fine paper with operational reach across more than 50 countries. It was established in 1845 and has been in the same family for six generations. Besides targeting organic growth, the company also invests in sustainable innovation. It created the world’s first coffee cup recycling plant, able to process 10 million cups per week.
The company is worth £99 million (July 2019).
PerformanceDespite the portfolios being relatively young, Unicorn has a long track record of good performance on AIM, although remember past performance is not a guide to the future. Below are the performance figures of the portfolios to date.
Annual performance - by calendar year to 30 June 2019
|Unicorn AIM IHT Portfolio Service - Income Portfolio||6.9%||21.3%||-15.0%||13.9%|
|Unicorn AIM IHT Portfolio Service - Growth Portfolio||14.3%||42.3%||-24.3%||18.0%|
Risks – important
This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice.
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. 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. 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.
Both the Income and Growth portfolios will be concentrated with between 25 and 40 holdings placing more importance on the stock-picking abilities of the manager.
The Chancellor has asked the Office for Tax Simplification to review a range of aspects of IHT, including BPR. A report has been published in July 2019. It is as yet unknown when and if any of the recommendations will lead to a change in rules. Currently, investments qualifying for Business Property Relief should be free from IHT after two years. Please remember, tax rules can and do change and benefits depend on circumstances.
Fees and charges
An overall summary of the charges is shown below.
|Full initial charge||4.5% plus VAT|
|Wealth Club initial saving||3.5%|
|Net initial charge through Wealth Club||1% plus VAT|
|Annual management charge||2% plus VAT|
|Exit fee (not payable on death)||1%|
|Minimum investment||£50,000 (£20,000 for top ups)|
See example of the total charges over 5 years
Please see the provider's documents for more details on the total fees and charges. If you would like a full breakdown of charges, or a personal illustration, please let us know.
Unicorn has always had a small company bias across its range of products and can rightly be called a specialist in this area. They are experienced in smaller company and AIM management and have a clear vision for what they want to achieve. Identifying long term winners and sticking with them over many years is the key. Of particular interest are the “blue chip” AIM stocks and those with large family shareholdings. This service is managed by a dedicated and talented fund management team and is worthy of consideration.
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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
- £23.0 million
- Initial charge
- Saving via Wealth Club
- Net initial charge