Finely crafted investments

 

Viewpoints

VCT Sector And AIM Market Both Celebrate 20 Year Anniversary

Posted by AIC on 09/Jun/2015

The VCT sector passed its 20th anniversary earlier this year and the AIM market is celebrating the same milestone this month.

As the performance tables illustrate, active management and careful stock picking in the VCT AIM Quoted sector have demonstrated value in what has been a turbulent index (see performance table at end of release). Indeed Downing ONE VCT has been there almost from the beginning, launched in May 1996.

VCT views on AIM anniversary

Judith MacKenzie, Head of Public Equity, Downing, said: "The 20th anniversary of the Alternative Investment Market (AIM) represents a major milestone for the market. It has confounded its early critics and has delivered a successful growth market to investors and the companies themselves. Although as an Index it has been volatile, there has been outstanding performance from Information Technology and Industrial subsectors of the AIM All Share. The market is now an established forum for small companies worldwide, while a terrific universe for the selective stock-picking investor, which is second to none in the world."

Andy Gray, Manager, Artemis VCT said: "Over the years we have found AIM to be a vibrant, dynamic market. Many of our most successful investments have involved providing capital to businesses under the stewardship of management teams who have shared a similar long term investment approach to ourselves. The funding available through the AIM market has allowed them to unlock the potential of their businesses to the benefit of both shareholders and other stakeholders alike."

Chequered history, but a more mature market today

So how has the AiM market evolved? Douglas Lawson, Director at Amati said: "The AIM market has a chequered history. There is little doubt that many companies have been admitted that should never have come near the market, especially prior to 2008. Since the downturn, there has been a net decline in constituents as fewer companies completed an IPO and many de-listed. Today AIM has 1,077 companies (at 30 April 2015) and, in our view, the quality of the market has improved as it has matured, albeit that problem areas remain.

"AIM has had some well-publicised successes such as ASOS and some well publicised failures such as Silverdell, and controversies such as Quindell. There are familiar brands such as Mulberry and Young & Co's Brewery. There are also many long established 'family' businesses such as Nichols (makers of Vimto), James Halstead and FW Thorpe. Amongst our most successful investments are: Accesso, which sells its technology to theme parks to customers who wish to avoid queueing as well as the operators who wish to sell ticketing and add-ons online and who need complex software solutions to run their businesses; and Sprue Aegis, which designs and supplies carbon monoxide alarms."

Which have been your favourite AIM investments?

Kate Tidbury, joint fund manager of the Octopus AIM VCTs said: "GENUS - Genus was once the scientific wing of the Milk Marketing Board, the historic centralised buyer of milk from dairy farmers, who themselves were Genus' customers for bull semen, itself needed to make cows pregnant to ensure milk production. Genus became a separate entity and listed on OFEX in 1996, moving to AIM in 2000, when it raised £2.7m at 180p a share. In seven years on AIM it became the leading animal genetics company worldwide, no longer just selling 8m doses of bull semen around the globe. In 2007 Genus listed on the main market raising £19.4m at 720p and today the share trades around 1490p: a world leader born and funded on AIM."

Andrew Buchanan, joint fund manager of the Octopus AIM VCTs chose Mears Group, a well-known company, which maintains and repairs hundreds of thousands of homes for their social housing clients and provides support to around 40,000 people, enabling older and disabled people to continue living in their own homes.

Andrew Buchanan, joint fund manager of the Octopus AIM VCTs said: "MEARS GROUP - I first came across Mears when the present Chairman and I were presenting in Bristol to executives of small companies considering potentially listing on AIM. It sounded so good that I bought the shares, paying 11p in 1996. The company produced 40% compound profits growth in its twelve years on AIM before moving to the main market in 2008 at a price around 300p, when the original 83 employees had become more than 8,000 and revenue had grown from £12m to over £300m, the forward order book exceeded £1bn and dividends had risen from nil to 4p."

Annabel Brodie-Smith, Communications Director, Association of Investment Companies (AIC) said: "The performance of the VCT AIM Quoted sector in relation to the FTSE AIM All-Share is a good illustration of the benefits of active management. The AIM sector houses a large collection of winners and losers, and whilst the best companies may not always be easy to spot, the VCT AIM Quoted sector has more than held their own in a difficult market."

Share price total return on £100 to 31 May 2015

Duration years 1 3 5 10 Launch date
FTSE AIM All-Share 96.03 115.19 117.78 89.47  
VCT AIM Quoted weighted average 100.18 157.27 184.59 125.54  
Amati VCT 93.59 113.46 125.75 117.52 29/03/2005
Amati VCT 2 93.06 120.83 175.83 79.77 22/02/2001
Artemis VCT 109.77 180.14 198.81 123.39 14/12/2004
Downing ONE VCT 99.39 127.92 147.26 63.38 03/05/1996
Hargreave Hale AIM VCT 1 96.4 145.94 176.56 129.29 29/10/2004
Hargreave Hale AIM VCT 2 100.13 143.13 144.48   16/04/2007
Octopus AIM VCT 98.18 161.36 210.59 182.8 17/03/1998
Octopus AIM VCT 2 92.85 146.98 160   25/01/2006
Rensburg AIM VCT 103.68 151.11 252.17 224.84 10/06/1999
Unicorn AIM VCT 106.42 225.71 216.33   05/04/2007