Unicorn AIM IHT & ISA Portfolio Service
The Unicorn AIM IHT & ISA Portfolio Service is a portfolio of AIM shares that combines the tax benefits of ISAs (tax-free income and growth) with the inheritance tax protection which some AIM shares benefit from.
Unicorn Asset Management is one of the leading investment managers specialising in investing in the AIM market. We approached them to create a solution for a common problem – how to pass on ISA holdings to the next generation without paying inheritance tax on death. We had found that existing solutions had the following problems:
- They focussed on the inheritance tax savings and not the investment management of the portfolios as well.
- They were not available on wrap platforms.
- They did not offer an income option so clients could not continue to take a tax free income from their ISAs.
The Unicorn AIM IHT & ISA Portfolio Service will invest the ISA and non-ISA funds into a carefully selected portfolio of AIM-listed companies that have passed Unicorn Asset Management’s proven and rigorous selection process.
The portfolios are actively managed, available on some of the leading platforms and can pay out the naturally generated income. As long as your client holds the shares in the ISA for at least two years, at the time of death the investments should be 100% exempt from IHT.
For more information, contact LightTower Partners:
Telephone: +44 (0)20 7071 3920
- The manager, Chris Hutchinson, is one of the best known and most experienced investors on AIM
- Seeks the “blue chips” of AIM: profitable, dividend-paying companies
- Income or growth portfolios available: any income will be paid tax-free, quarterly
Unicorn Asset Management is a specialist in UK smaller companies. About a quarter of the £1.4 billion Unicorn manages is in AIM stocks. Unicorn’s AIM VCT is the UK’s largest. The Unicorn AIM IHT portfolios were launched in 2016 and are managed by Chris Hutchinson, who is also the lead manager for the Unicorn AIM VCT.
There are around 1,000 firms on AIM. As Chris Hutchinson puts it: ‘Among the dross there are some great businesses. But you have to filter through the ones that over-promise, under-deliver, burn through cash or are too specialist. Whittle them down to around 40 and you stand a good chance of getting some decent returns.’
The IHT portfolios often invests in businesses Unicorn has known for years and which were previously backed by the VCT.
Watch a video with manager Chris Hutchinson of Unicorn:
There is a choice of an Income or Growth Portfolio. The former will pay out any dividends received quarterly, whilst the latter will re-invest them. Please remember, dividends are variable and not guaranteed.
Each of the two portfolios currently includes 29 AIM-listed companies, spread across a variety of sectors and independently assessed as likely to qualify for BPR. A similar investment strategy applies to both. However, for the Income portfolio, a greater emphasis is placed on the level and sustainability of dividends.
Mr Hutchinson is looking for established, profitable, cash-generative businesses. Indeed, the average market cap is £476 million for the Growth Portfolio and £342 million for the Income Portfolio (June 2019).
All the companies across the two portfolios were profitable at the time of investment. All but three pay dividends (as at June 2019).
Mr Hutchinson aims to avoid any companies with significant debt, which are burning through cash or relying on regular rounds of fundraising, and he steers clear of those he doesn’t understand. For instance, he avoids investing in oil, gas, mining and commodities along with biotech and early-stage tech companies. He prefers businesses where the founders – or the founding family – still have a significant stake.