Puma AIM IHT ISA

This AIM IHT service is managed by Puma Investments, part of Shore Capital, one of the largest AIM market makers.

Dr Stuart Rollason, an experienced small and mid-cap investment professional, is the lead manager. He was appointed in 2021 having previously managed the AIM IHT service at Kestrel Partners LLP for a decade.

The service currently has £194.4 million in assets under management (December 2023). It targets more mature AIM companies, with a preference for those whose management has a significant stake in the business.

• Portfolio of 30 to 40 AIM stocks
• Bias towards family-owned or founder-controlled firms
• Minimum investment £20,000 - 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 ISA Transfer Form and post it to us
• Apply outside an ISA: top up or make a new subscription online using the link below

The manager

The Puma AIM IHT service is managed by Puma Investments, part of the Shore Capital group, which has £1.8 billion in assets under management. £194.4 million is held within the Puma AIM IHT service (December 2023). 

The lead manager is Dr Stuart Rollason, who joined Puma in May 2021. He is an experienced small and mid-cap investment professional, with over 23 years’ experience. He joined from Kestrel Partners LLP, where he led the management of the AIM IHT service for a decade. Dr Rollason is supported by Joseph Cornwall, investment director, who joined Puma in August 2021 after managing the Gore Browne IM AIM IHT Portfolio for five years. 

Puma Investment Management Ltd is the investment manager. The custodian is Pershing Securities Ltd, holding shares on investors’ behalf. 

Investment strategy

The service targets mature AIM businesses screened across three key metrics: quality, growth, and value. Capital preservation is also a priority.

The strategy focuses on companies with sensible management, particularly those with a stake in the business. Companies will be selected for their potential to generate returns exceeding the cost of capital - not guaranteed.

In addition, the portfolio seeks companies with sustainable margins, sales and profit growth and a sensible balance sheet. A cheap valuation isn’t the most important factor for Puma. A strong balance sheet, with limited gearing, is more important, in its view. The firm focuses on companies with a market cap of at least £50 million.

The targeted hold period for investments is three to five years but longer positions will be considered if the company continues to improve and valuations appear sensible. Holdings will be sold when companies reach what Puma considers to be an appropriate fair value or if the investment team changes its view on a stock. Puma believes it is better to exit a position sooner – even if this results in a loss – than potentially incur a greater loss later on.

Current portfolio overview

Investors will hold a portfolio of around 30-40 shares, closely mirroring the investment director’s own portfolio but individual portfolios will vary.

The portfolio seeks to be fully invested in AIM shares that qualify for IHT relief, with only a small cash position (approximately 2-5%). Each holding is expected to account for 2% to 6% of the whole portfolio on average, with no position exceeding 10%.

The manager avoids early-stage companies such as loss-making miners, biotechnology companies and high-growth concept stocks.

Currently, the average market capitalisation of companies in the portfolio is £422.6 million (December 2023). The charts below shows the sector breakdown for the top 10 sectors, which together account for c.85% of the portfolio, and the market cap value distribution. 

Sector breakdown (%)

Market capitalisation breakdown (%)

Examples of portfolio companies

Epwin

Founded in 1976, Epwin Group is a leading UK manufacturer and supplier of windows, doors, and decking.

The Group designs products in-house and sells them through its portfolio of established B2B brands. Its core market is repair, maintenance, and improvement (RMI) for private housing, however, it also supplies materials for new builds and the social housing sectors. 

In its latest interim results (to September 2023), the Group recorded revenues of £180 million, a minor increase compared to the previous year. Operating profits increased 11% to £11.9 million and operating margin improved, owing to easing raw material prices and cost management. 

Puma rates Epwin’s ability to navigate volatile market conditions, particularly when many of its competitors struggled. Growth has also been respectable, in Puma’s opinion, with operating profits increasing 62% over the past decade and capacity remaining on the balance sheet for further acquisitions. Puma believes these attributes, combined with a regulatory tailwind, mean the shares are attractively priced. 

The market capitalisation of the business was £117.8 (December 2023).

Tracsis

Tracsis span out from the University of Leeds in 2004. Its scheduling and rostering software (which helps railways run more efficiently) and condition monitoring hardware (which identifies possible issues with rail infrastructure before a costly failure) are now used by virtually all UK train operating companies. 

In the 12 months to July 2023, the business reported revenues of £81.5 million, up 19% year-on-year. The UK rail technology and services division was a key driver of growth in the period, with multiple large-scale contracts secured with rail operators and Network Rail. There was also positive news from the company’s North American operations, with significant growth reported on the back of the US Government’s infrastructure spending bill. 

Puma invested in Tracsis based on its leading market position and the strength of its products, which are fundamental to the safety and operation of the UK rail network, in Puma’s opinion. It believes the company has good growth prospects and is undervalued when accounting for the long-term opportunity in North America. 

Tracsis has a current market capitalisation of approximately £280 million (December 2023).

Patisserie Holdings

As is to be expected, not all investments work out. One example is Patisserie Valerie.

Patisserie Holdings was formally placed into administration in January 2019 following the discovery of extensive fraudulent accounting irregularities back in October 2018. The shares have been marked down to zero with no return expected for shareholders.

Performance

The Puma AIM IHT service was launched in 2014. The chart below shows performance over five years compared 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 December 2023

Access to your investment

Investments in this portfolio are for the long term. However, if your circumstances change, you can request partial or full withdrawals from the portfolio at any time, subject to liquidity. In normal market conditions, Puma aims to fulfil withdrawal requests within two weeks but this is not guaranteed. Any amount you withdraw will no longer be IHT free. Withdrawals may result in a Capital Gains Tax liability unless held in an ISA.

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. If a service is managed by a small investment team, it could create key person risk. 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. 

In recent months, there have been widely reported rumours that the government might change or abolish IHT. It is currently unknown if and when any decision might be announced.

Charges

A summary of the main charges and savings is shown below. 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.

Our view

The service targets mature AIM businesses screened across three key metrics: quality, growth and value. Notably, the portfolio steers clear of the AIM market’s increasing number of early-stage businesses, biotechnology businesses, and high growth concept stocks. The resulting portfolio is spread across a variety of sectors and has a bias towards industrial support services and software and computer services. 

The service has followed the same strategy since its inception despite a change of management teams in 2021. The service’s current lead manager, Stuart Rollason, brings significant experience, having managed AIM IHT portfolios for over a decade. However, it should be noted that this is a small team, with just two members. 

The fees are middle of the range compared with other AIM ISA portfolios. The minimum of £20,000 could make it a contender for this year’s ISA subscription.

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.