Research vital before you put Aim shares in an Isa

 

The Treasury has decided to allow more than 1,000 Aim-listed stocks to be included in tax-efficient individual savings accounts (Isas).

However, with Aim shares much more risky than companies on the main stock market index, should investors be thankful for the extra opportunity?

“The Treasury's decision will provide a tangible boost to investors' choice,” believes Helal Miah, investment research analyst at The Share Centre. “It will allow investors to take advantage of a wider range of stocks offering both growth prospects and value.”

More choice is good, but anyone considering an Aim share needs to be well aware of the potential dangers.

There's much less information available about smaller companies, and they are also much less in the spotlight.

That means problems can remain undiscovered for much longer than might be the case with a blue-chip firm, for instance.

However, you may still have heard of many Aim stocks. Mulberry, for instance, is the luxury goods firm which has struggled recently. But that could change if it can get a foothold in the Far East market, said Mr Miah. “Other luxury brands are doing extremely well from Asian demand and we believe that Mulberry can prosper too.”

But he admits the punt is high-risk, which is true of a lot of Aim shares.

So while investors should welcome the opportunity to put a wider variety of shares into their Isa, they should research Aim-listed companies more thoroughly.

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