“One hundred and eight-seven AIM firms have graduated to the London Stock Exchange’s Main Market and many more have received bids and been acquired, so investors with an appetite for risk and a desire for capital gains will continue to investigate and scour the market for portfolio picks,” says AJ Bell Investment Director Russ Mould. “Fledgling firms are frequently guided by entrepreneurial management and have the ability to grow rapidly from a small base. Furthermore, small-caps are often focussed on niche markets or are the beneficiaries of secular growth trends, which mean they are less reliant on the wider economy.”
Mould continues: “A new report from Grant Thornton shows that AIM firms who come to the market with less than £5 million in annual sales grow their top line by more than 200% and at least double staff numbers during their first year after admission to the market.”
He adds: “However, it is every bit as important to do your own research on them as it is with the bigger names of the FTSE 100 and FTSE 250. Small-cap companies usually have greater exposure to a single product or service, can be reliant on the founder or chief executive and are often active in just one geographic region. This means they may have a less diversified revenue base and can be more vulnerable to unforeseen events than a large-cap stock.”
Notes for Editors
- AIM launched on 19 June 1995 with just 10 firms and a market cap of £82 million.
- AIM is currently home to 1,100 companies with a combined market cap of £70 billion, according to the London Stock Exchange’s (LSE) website, against a total number of listings on the LSE of 2,417 with an aggregate value of £4.4 trillion.
- The average AIM-quoted company’s market cap is therefore £70 million, against £8 million in 1995.
- Under new rules launched by Chancellor of the Exchequer George Osborne, AIM stocks were made eligible for inclusion in Individual Savings Accounts (ISAs) from August 2013 and were exempted from 0.5% Stamp Duty and Stamp Duty Reserve tax on share dealings from April 2014.