AIM investing is like ordering Japanese Fugu fish

“Building a portfolio of AIM stocks can be compared to ordering Fugu (blow fish) in a Japanese restaurant.

Delicious and exciting as it promises to be, you want to be sure that the chef is well trained, as if the dish is prepared by amateurs it can be very dangerous,” says Anthony Scott, an AIM investment expert at Charles Stanley who uses AIM stocks to build portfolios which mitigate the potential impact of inheritance tax (IHT).

He said: “Recent criticism of AIM risks frightening investors unnecessarily away from some substantial investment opportunities. It is said there are some fishy stocks on AIM, but there are many excellent companies as well. The whole purpose of AIM is to provide a market for small companies which by their nature are higher risk than large cap stocks. The Government acknowledges the higher risk nature of AIM by providing generous tax incentives to investors.

“Last year AIM raised £9.9 billion for 462 new admissions to the market and a further £5.7 billion for existing companies. There are now over 1,600 companies quoted on AIM and with such a wide choice of stocks it is perfectly possible for an investment professional to construct a sensible portfolio for investors which is tax-efficient as well.”

His current favoured stocks for an IHT portfolio include:

Dobbies Garden Centres – an exceedingly well-managed retail business mainly in the north of England and Scotland which is building up its assets.

Finsbury Food Group – a former cash shell which over five years has developed into a successful bakery business. Shareholders will soon vote on a £37.5 million takeover of the bakery chain Lightbody Group Ltd. Lord Maurice Saatchi, its non-executive chairman, is a significant shareholder but will resign the chairmanship following the takeover.

James Halstead – a commercial flooring firm, established in 1915, awarded the Queen’s Award for Enterprise in 2004.

NWF – this provider of grocery warehousing and distribution, animal feeds, fuel delivery and garden centres was the 52nd company quoted on AIM, back in 1995. Since then it has grown its core business and expanded into new markets with great success. (NWF Group plc is a client of Charles Stanley Securities)

Stanley Gibbons – the internationally renowned philatelist has been dealing in collectible postage stamps since 1856 and joined AIM in September 2000. It therefore has demonstrable expertise in a highly specialised business.