Push for increased risk to fuel growth urged by head of London's faltering AIM junior market
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London's junior market, AIM, is ticking off 30 years today with the boss pleading for a change in the UK's attitude towards risk to fuel economic growth. Marcus Stuttard, AIM's head honcho, claims that British investors have become too risk-adverse over the past decade.
This risk-aversion extends to smaller companies and emerging technologies, meaning fewer investments and weaker economic growth. Stuttard argues that we need to celebrate and support entrepreneurs to drive higher growth, understanding that this means embracing the potential losses that come with the prospect of high returns.
AIM, short for Alternative Investment Market, is a division of the London Stock Exchange that was founded back in 1995. Both the number of companies on AIM and the investor appetite for these higher-risk ventures have waned over the past decade.
While AIM offers a less stringent regulatory environment than the main London market, making it accessible for smaller firms with fewer resources, the market has faced a sharp fall in firms following disappointing returns. Moreover, the October announcement of reduced inheritance tax relief on AIM-listed stocks has discouraged investors from holding shares in smaller companies for tax purposes.
Industry experts like Jason Hollands, managing director at Evelyn Partners, note that the anniversary might be a cause for celebration, given AIM's impressive track record of raising £136 billion for over 4,000 companies since its inception. However, present conditions are tougher, with recent underperformance against the main market and a cooling investor appetite.
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- Marcus Stuttard, the head of AIM, urges a change in the UK's approach to risk, suggesting that more investing in the stocks of smaller companies on AIM could boost the economy.
- The reduced inheritance tax relief on AIM-listed stocks might discourage pension funds from investing in emerging businesses, limiting the growth of these firms.
- To delve into the realm of finance and business, investors could find platforms such as AJ Bell, Hargreaves Lansdown, interactive investor, InvestEngine, and Trading 212 beneficial, although it's crucial to thoroughly research each to find the most suitable fit for personal investing needs.
