Risky AIM shares prove to be a young investor’s game

18th August 2014

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Just 12 months down the road since the Chancellor George Osborne opened the gates for investors to put AIM stocks into ISAs, new research shows it is the younger generations who have grabbed the bull by the horns.

An analysis by stockbroker TD Direct Investing shows that the AIM (Alternative Investment Market) index currently appeals more to a younger demographic, with three-and-a-half times more 30-44 year olds investing in AIM compared to those aged 45-75. Three quarters have attributed Britain’s positive economic outlook and the potential of higher returns as the main reasons behind their choices.

The AIM market is only for those with a strong appetite for risk given it is inhabited by small fledgling firms looking to raise the capital they need for expansion, and as such investors are likely to endure a lot more volatility. For example online retailer and AIM constituent ASOS, has endured a 65% share price fall in just six months.

On the other hand, AIM listed support services firm Staffline Group is up by 1,943% over five years. But reviewing the impact of recent negative exposure, from brands such as ASOS, the study found that investor confidence hadn’t been adversely affected, with 77% of those aware of the situation saying they are not concerned because they believe ASOS has a promising future as a successful British business.  In addition, almost two-thirds, 61%, are more likely to invest in AIM stocks knowing that companies like ASOS are listed.

Over the past five year, while the FTSE 100 is up 70%, the FTSE AIM index is ahead by 38% but TD Direct Investing’s research found that the top five reasons investors are choosing AIM stocks are:

Overall it found that investor confidence in the AIM stock market is higher than ever before, with 89% of 30-44 year olds saying they are confident it will deliver returns.

Darren Hepworth, global trading director at TD Direct Investing said: “The lack of young people planning for their financial future has been top of the news and political agenda for a very long time.  However our findings highlight a shift in understanding and behaviour among ‘younger’ investors.  The changes in legislation, allowing AIM into ISA’s and the increase of the ISA allowance, have no doubt had a very positive impact on saving and investment in general.

“It seems we are finally seeing the positive effects of the uplift in the UK economy, with younger investors increasingly showing interest in the AIM market and taking advantage of the flurry of recently-listed high profile companies for them to choose from.”

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