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 aims to take advantage of the Business Property Relief (BPR) rules that mean certain companies are exempt from an investor’s estate after two years of investment.
- 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 tax-free, quarterly
- ISA available
- Save up to 3.5% on initial charges through Wealth Club
- Minimum £50,000
Unicorn Asset Management is a specialist in UK smaller companies. About a third of the £1 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 £12.3 million.
Mr Hutchinson looks for three main characteristics in an AIM company, a tactic that has served him well to date. It must produce 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.
Each portfolio will have between 25 and 40 holdings and each company tends to have a market capitalisation of at least £100 million. A long history of paying dividends is preferable. Mr Hutchinson is looking for the “blue chips” of AIM. The income portfolio has invested in 30 companies to date, with an average market cap of £320 million. The growth portfolio has invested in 42 companies with an average market cap of £509 million (figures at November 2018).
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. Last year it reported revenues of £249.51 million and record profit before tax of £46.70 million, with a dividend yield of 3.36% (as at 30.06.2018).
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. Last year it reported revenues of £164.04 million and profit before tax of £34 million, with a dividend yield of 1.31% (as at 30.09.2017). It boasts 14 consecutive years of dividend increases.
Growth portfolio – some examples
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. This year it reported revenues of £96.31 million and profit before tax of £4.54 million (as at 31.03.2018).
Somero Enterprises®. is a leading manufacturer of concrete placing equipment and machinery. Its laser technology allows to install concrete faster, flatter and with fewer people. Clients include Tesco, Amazon, Jaguar, Airbus and IKEA. Last year it announced revenues of £85.63 million and a pre-tax profit of £25.74 million (as at 31.12.17).
Despite the portfolios being 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 31 December
|Unicorn AIM IHT Portfolio Service - Income Portfolio||6.9%||21.3%||-1.2%|
|Unicorn AIM IHT Portfolio Service - Growth Portfolio||14.3%||42.3%||1.3%|
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.
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.
The Chancellor has requested a review of a range of aspects of IHT to simplify the tax system. The review timescales, its scope and impact are unknown. Currently, investments qualifying for Business Property Relief should be free from IHT after two years. Tax rules can and do change and benefits depend on circumstances.
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
- £21.0 million
- Initial charge
- Saving via Wealth Club
- Net initial charge