RC Brown Investment Management has unveiled an Aim IHT portfolio service targeted at IFAs.
The UK equity specialist said the strategy aims to give investors exemption from inheritance tax after two years by investing in a portfolio of 25-35 Aim companies that qualify for business relief.
Under IHT rules, individuals holding shares in unquoted companies are liable to be exempt from IHT if the shares have been held for two years or more. The Aim market qualifies for this relief although not all companies listed on the index do – they have to be trading companies rather than, for example, Aim-listed investment trusts that have other underlying investments.
The RC Brown portfolio currently has about 30 names with a market cap in excess of £100m, although this is not a hard line, fund manager Oliver Brown (pictured) told Portfolio Adviser.
Brown will manage the portfolio along with Neil Whelan. Both managers have more than 15 years’ experience in this sector and will use RC Brown’s primary opportunities process to access opportunities, which accesses IPOs and fund raisings more typically available to institutions.
The IHT service offers a minimum investment of £50,000 and has no dealing, custody or hidden charges. The portfolio charge is 1.25% plus VAT.
Brown said the strategy is not a fund because in order to qualify for business relief the shares have to be held directly in the name of the individual.
He added: “There is no point doing it unless you have assets more than £1m because by investing in the Aim market, you have to accept you are taking greater risk, these are typically smaller and typically growth companies. They have the ability to make money but also the ability to go wrong.”
Last year, cake chain Patisserie Valerie, one of the darlings of the Aim-index, was found to have a£40m hole in its books which caught markets and shareholders completely by surprise.
Brown added: “It is going to be a growth-orientated portfolio and invariably if there is the risk-averse nature the Aim market took last year, you have to accept there will be falls in the value of the portfolio.”
