The funds investing in the AIM market

James Yardley 23/03/2023

If you want exposure to UK small companies, then the Alternative Investment Market (AIM) is a very good place to start. This sub-market of the London Stock Exchange was launched in 1995 to help growing firms seek capital to fund their development.

But what do you need to know about AIM – and which investment funds focusing on such companies are worth considering?


When the Alternative Investment Market made its debut almost 30 years ago, it consisted of 10 companies valued at a combined £82m, according to the London Stock Exchange. Today, the market has more than 850 companies that boast a combined market capitalisation of almost £135bn.

It has become a favoured destination for many entrepreneurial businesses that are looking for both finance and advice to help them grow. And this also provides plenty of opportunities for investors to buy into fast-developing, innovative companies that could eventually become household names.

Pros and cons

The main benefit of investing in AIM-quoted companies is getting exposure to future success stories at an early stage in their development. This part of the stock market tends to be under-researched, especially in comparison to the large caps, which means analysts may miss exciting stories.

However, there are potential downsides. Many of these companies are at an early stage in their development so there is a chance they could end up failing.

Fund suggestions

So, which investment funds embrace the AIM market? We have picked out five portfolios that can give you access.

IFSL Marlborough UK Micro-Cap Growth

This fund is one of the largest and most successful funds in the IA UK Smaller Companies sector and has been delivering great returns for the best part of two decades. Its co-managers, Guy Feld and Eustace Santa Barbara, primarily focus on companies with market capitalisations of up to £500m, although there are plenty with less than £150m.

The fund is also very diversified and rarely has more than 2.5% of assets invested in any one particular company. Currently, there are more than 180 holdings*. These include Horizonte Minerals, a member of the FTSE AIM 100 Index, and a leading nickel company that’s developing projects in Brazil*.

Liontrust UK Micro Cap

The next fund on our list is Liontrust UK Micro Cap, which searches for companies boasting durable competitive advantages over their rivals. This portfolio is run by a team of five managers that have been using a proven investment process to great effect for a number of years. Their focus includes an insistence that any companies considered for inclusion must have a minimum 3% equity ownership by senior management.

The fund’s 10 largest holdings today include Kitwave Group, a delivered wholesale business with depots across the UK**. It specialises in impulse products, alcohol, and frozen, chilled and fresh foods. 87% of the fund’s assets are currently invested in FTSE AIM companies**.

Unicorn UK Smaller Companies

Another contender is this high conviction fund that currently has around 40 holdings. Its largest positions include Somero Enterprises, which makes equipment that’s used to place and screed concrete in buildings**. The company is also on the FTSE AIM 100 Index.

The Unicorn fund, which is managed by Simon Moon, focuses on fundamentals and aims to make long-term investments, while avoiding lower quality cash-burning businesses. We like its focus on understanding companies and believe the fact it’s quite concentrated allows it to capture the performance of its best ideas.

TM Tellworth UK Smaller Companies

Tellworth is a specialist UK equity boutique and its smaller companies fund is run by the very experienced Paul Marriage, John Warren and James Gerlis. The fund, which was launched less than five years ago, is a true smaller companies portfolio that doesn’t invest in either micro-cap or mid-cap names.

We like its solid, flexible process and believe this gives the managers enough freedom to focus on the job of picking stocks. According to the most recent factsheet, the fund has 48 holdings**. One of the largest is in IG Design, which is a member of the FTSE AIM All-Share Index**.

TB Amati UK Listed Smaller Companies

This is an unconstrained portfolio that seeks structural UK growth businesses that can grow faster than the economy. It’s also managed by a highly experienced team of small cap specialists. The portfolio currently has just under 70 holdings*.

Its 10 largest positions include Accesso Technology, which provides ticketing, point of sale and virtual queuing solutions**. This company is on the FTSE AIM UK 50 Index.

*Source: fund factsheet, 31 January 2023
**Source: fund factsheet, 28 February 2023

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions.Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice.Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.