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BLOG: The FTSE’s younger brother comes of age – what next for AIM?

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Written by: Carl Howard, commercial director at TD Direct Investing
17/06/2015
With 19 June set to mark 20 years since the launch of the UK’s most innovative and entrepreneurial exchange, what does the future hold for AIM, the FTSE 100’s younger sibling?

Where now for the AIM?

While a lot of ink has been spilled about the bounce in the AIM’s fortunes following a rush of recent flotations – from Marshall Motors’ flotation in automobiles through to Metro Bank’s forthcoming IPO – the emergence of the AIM as a genuine opportunity for entrepreneurial investors deserves closer scrutiny. TD Direct Investing data shows that there has been a 24.4 per cent increase in the volume of AIM stock traded by its customers since December 2014.

However, despite its recent successes and bumpy ride, AIM now finds itself at a crossroads, as other ways to raise capital evolve – in the form of crowdfunding etc.  The London Stock Exchange (LSE) will be continuing to explore ways in which this momentum can be maintained for another two decades.

A source of growth for UK Plc

First, the positives. For one, the economic contribution of the index to the UK economy is a large one. A recent report, produced by the London Stock Exchange (LSE) and accountancy firm Grant Thornton, showed that, in 2013, not only did AIM make a £14.7bn contribution to UK GDP, it also directly supported over 400,000 jobs and paid £2.3bn in tax.

With 20 years under its belt, AIM appears to be going from strength to strength – especially in the eyes of younger investors. Previous research commissioned by TD Direct Investing has indicated that AIM’s role as a forum for new and more innovative businesses to make their mark is, in turn, helping to drive investor interest among a younger generation of investors. Our findings showed that 30-44 year-olds are three-and-a-half-times more likely to invest in AIM stock than those who fall into the 45-75 age group.

The report outlined how putting the right incentives in place has helped drive the recent upsurge in investment, with our research revealing that the decision to allow AIM within ISAs now ranks as one of the top five reasons driving investors are choosing AIM stocks. This is an area which the AIM needs to explore further if it is to maintain the momentum of investor interest necessary to enjoy sustained success.  With the Treasury’s recent pension reforms and changes to ISAs fuelling an investor revolution among consumers, AIM is shaping up to be the launch pad for a new (and hungry) breed of investors.

What does the future hold?

Clearly there is an opportunity for AIM to serve as a catalyst for the ongoing investor revolution which we’ve seen emerge across the UK since last year’s reforms to the pension landscape. While government action is transforming the options available to investors looking for greater flexibility over their portfolio, AIM remains an exciting investment hub and continues to be the home of fast-growing and innovative British businesses.

 

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